Correlation Between RCM TECHNOLOGIES and RADIANCE HLDGS

Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES and RADIANCE HLDGS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RCM TECHNOLOGIES and RADIANCE HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCM TECHNOLOGIES and RADIANCE HLDGS GRPHD 01, you can compare the effects of market volatilities on RCM TECHNOLOGIES and RADIANCE HLDGS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RCM TECHNOLOGIES with a short position of RADIANCE HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and RADIANCE HLDGS.

Diversification Opportunities for RCM TECHNOLOGIES and RADIANCE HLDGS

-0.46

Correlation Coefficient

RCM TECHNOLOGIES  RADIANCE HLDGS

Very good diversification

The 3 months correlation between RCM and RADIANCE is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and RADIANCE HLDGS GRPHD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RADIANCE HLDGS GRPHD and RCM TECHNOLOGIES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RCM TECHNOLOGIES are associated (or correlated) with RADIANCE HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RADIANCE HLDGS GRPHD has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between RCM TECHNOLOGIES and RADIANCE HLDGS

Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 0.63 times more return on investment than RADIANCE HLDGS. However, RCM TECHNOLOGIES is 1.59 times less risky than RADIANCE HLDGS. It trades about 0.05 of its potential returns per unit of risk. RADIANCE HLDGS GRPHD 01 is currently generating about 0.01 per unit of risk. If you would invest  1,130  in RCM TECHNOLOGIES on October 11, 2024 and sell it today you would earn a total of  1,030  from holding RCM TECHNOLOGIES or generate 91.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.6%
Values	Daily Returns

RCM TECHNOLOGIES  vs.  RADIANCE HLDGS GRPHD 01

RCM TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days RCM TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather uncertain basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RADIANCE HLDGS GRPHD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RADIANCE HLDGS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RCM TECHNOLOGIES and RADIANCE HLDGS

The main advantage of trading using opposite RCM TECHNOLOGIES and RADIANCE HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES position performs unexpectedly, RADIANCE HLDGS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in RADIANCE HLDGS will offset losses from the drop in RADIANCE HLDGS's long position.

The idea behind RCM TECHNOLOGIES and RADIANCE HLDGS GRPHD 01 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.