Correlation Between RCL Foods and Centaur Bci

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

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

Diversification Opportunities for RCL Foods and Centaur Bci

0.61

Correlation Coefficient

RCL Foods  Centaur Bci

Poor diversification

The 3 months correlation between RCL and Centaur is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Centaur Bci Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Bci Balanced and RCL Foods 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 RCL Foods are associated (or correlated) with Centaur Bci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Bci Balanced has no effect on the direction of RCL Foods i.e., RCL Foods and Centaur Bci go up and down completely randomly.

Pair Corralation between RCL Foods and Centaur Bci

Assuming the 90 days trading horizon RCL Foods is expected to generate 4.35 times more return on investment than Centaur Bci. However, RCL Foods is 4.35 times more volatile than Centaur Bci Balanced. It trades about 0.14 of its potential returns per unit of risk. Centaur Bci Balanced is currently generating about 0.22 per unit of risk. If you would invest  83,700  in RCL Foods on September 13, 2024 and sell it today you would earn a total of  14,600  from holding RCL Foods or generate 17.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

RCL Foods  vs.  Centaur Bci Balanced

RCL Foods

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, RCL Foods exhibited solid returns over the last few months and may actually be approaching a breakup point.

Centaur Bci Balanced

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Bci Balanced are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCL Foods and Centaur Bci

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

The idea behind RCL Foods and Centaur Bci Balanced 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.