Correlation Between RCL Foods and Trematon Capital

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

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

Diversification Opportunities for RCL Foods and Trematon Capital

-0.51

Correlation Coefficient

RCL Foods  Trematon Capital

Excellent diversification

The 3 months correlation between RCL and Trematon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RCL Foods and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of RCL Foods i.e., RCL Foods and Trematon Capital go up and down completely randomly.

Pair Corralation between RCL Foods and Trematon Capital

Assuming the 90 days trading horizon RCL Foods is expected to generate 0.58 times more return on investment than Trematon Capital. However, RCL Foods is 1.74 times less risky than Trematon Capital. It trades about 0.04 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about -0.09 per unit of risk. If you would invest  94,500  in RCL Foods on December 27, 2024 and sell it today you would earn a total of  4,200  from holding RCL Foods or generate 4.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

RCL Foods  vs.  Trematon Capital Investments

RCL Foods

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Trematon Capital Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trematon Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RCL Foods and Trematon Capital

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

The idea behind RCL Foods and Trematon Capital Investments 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.