Correlation Between RCM Technologies and NN

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

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

Diversification Opportunities for RCM Technologies and NN

0.75

Correlation Coefficient

RCM Technologies  NN

Poor diversification

The 3 months correlation between RCM and NN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding RCM Technologies and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc 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 NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of RCM Technologies i.e., RCM Technologies and NN go up and down completely randomly.

Pair Corralation between RCM Technologies and NN

Given the investment horizon of 90 days RCM Technologies is expected to under-perform the NN. But the stock apears to be less risky and, when comparing its historical volatility, RCM Technologies is 1.56 times less risky than NN. The stock trades about -0.22 of its potential returns per unit of risk. The NN Inc is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  345.00  in NN Inc on December 26, 2024 and sell it today you would lose (97.00) from holding NN Inc or give up 28.12% of portfolio value over 90 days.

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

RCM Technologies  vs.  NN Inc

RCM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCM Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with RCM Technologies and NN

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

The idea behind RCM Technologies and NN Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.