Correlation Between RCL Foods and Remgro

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

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

Diversification Opportunities for RCL Foods and Remgro

0.14

Correlation Coefficient

RCL Foods  Remgro

Average diversification

The 3 months correlation between RCL and Remgro is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Remgro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remgro 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 Remgro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remgro has no effect on the direction of RCL Foods i.e., RCL Foods and Remgro go up and down completely randomly.

Pair Corralation between RCL Foods and Remgro

Assuming the 90 days trading horizon RCL Foods is expected to generate 1.85 times less return on investment than Remgro. In addition to that, RCL Foods is 2.04 times more volatile than Remgro. It trades about 0.01 of its total potential returns per unit of risk. Remgro is currently generating about 0.03 per unit of volatility. If you would invest  1,324,616  in Remgro on October 5, 2024 and sell it today you would earn a total of  204,984  from holding Remgro or generate 15.47% return on investment over 90 days.

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

RCL Foods  vs.  Remgro

RCL Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RCL Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, RCL Foods is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Remgro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Remgro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Remgro is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RCL Foods and Remgro

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

The idea behind RCL Foods and Remgro 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.