Correlation Between Resources Connection and RCM Technologies

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

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

Diversification Opportunities for Resources Connection and RCM Technologies

0.82

Correlation Coefficient

Resources Connection  RCM Technologies

Very poor diversification

The 3 months correlation between Resources and RCM is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Resources Connection and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and Resources Connection 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 Resources Connection are associated (or correlated) with RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of Resources Connection i.e., Resources Connection and RCM Technologies go up and down completely randomly.

Pair Corralation between Resources Connection and RCM Technologies

Considering the 90-day investment horizon Resources Connection is expected to generate 0.61 times more return on investment than RCM Technologies. However, Resources Connection is 1.65 times less risky than RCM Technologies. It trades about -0.19 of its potential returns per unit of risk. RCM Technologies is currently generating about -0.2 per unit of risk. If you would invest  827.00  in Resources Connection on December 28, 2024 and sell it today you would lose (152.00) from holding Resources Connection or give up 18.38% of portfolio value over 90 days.

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

Resources Connection  vs.  RCM Technologies

Resources Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators 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.

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.

Pair Trading with Resources Connection and RCM Technologies

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

The idea behind Resources Connection and RCM Technologies 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.