Correlation Between RCM Technologies and Siam Cement

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

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

Diversification Opportunities for RCM Technologies and Siam Cement

0.03

Correlation Coefficient

RCM Technologies  Siam Cement

Significant diversification

The 3 months correlation between RCM and Siam is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding RCM Technologies and The Siam Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Cement 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 Siam Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Cement has no effect on the direction of RCM Technologies i.e., RCM Technologies and Siam Cement go up and down completely randomly.

Pair Corralation between RCM Technologies and Siam Cement

Given the investment horizon of 90 days RCM Technologies is expected to generate 0.58 times more return on investment than Siam Cement. However, RCM Technologies is 1.74 times less risky than Siam Cement. It trades about 0.06 of its potential returns per unit of risk. The Siam Cement is currently generating about -0.01 per unit of risk. If you would invest  1,290  in RCM Technologies on September 28, 2024 and sell it today you would earn a total of  1,027  from holding RCM Technologies or generate 79.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	70.77%
Values	Daily Returns

RCM Technologies  vs.  The Siam Cement

RCM Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCM Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal primary indicators, RCM Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Siam Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Siam Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with RCM Technologies and Siam Cement

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

The idea behind RCM Technologies and The Siam Cement 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.