Correlation Between Recce and Parkd

Can any of the company-specific risk be diversified away by investing in both Recce and Parkd 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 Recce and Parkd into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Recce and Parkd, you can compare the effects of market volatilities on Recce and Parkd 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 Recce with a short position of Parkd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Recce and Parkd.

Diversification Opportunities for Recce and Parkd

0.17

Correlation Coefficient

Recce  Parkd

Average diversification

The 3 months correlation between Recce and Parkd is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Recce and Parkd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parkd and Recce 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 Recce are associated (or correlated) with Parkd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parkd has no effect on the direction of Recce i.e., Recce and Parkd go up and down completely randomly.

Pair Corralation between Recce and Parkd

Assuming the 90 days trading horizon Recce is expected to under-perform the Parkd. In addition to that, Recce is 1.91 times more volatile than Parkd. It trades about -0.03 of its total potential returns per unit of risk. Parkd is currently generating about 0.23 per unit of volatility. If you would invest  2.10  in Parkd on October 10, 2024 and sell it today you would earn a total of  0.20  from holding Parkd or generate 9.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Recce  vs.  Parkd

Recce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Recce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Parkd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Parkd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Parkd is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Recce and Parkd

The main advantage of trading using opposite Recce and Parkd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recce position performs unexpectedly, Parkd 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 Parkd will offset losses from the drop in Parkd's long position.

The idea behind Recce and Parkd 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.