Correlation Between Resources Connection and SBC Medical

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

By analyzing existing cross correlation between Resources Connection and SBC Medical Group, you can compare the effects of market volatilities on Resources Connection and SBC Medical 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 SBC Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resources Connection and SBC Medical.

Diversification Opportunities for Resources Connection and SBC Medical

0.07

Correlation Coefficient

Resources Connection  SBC Medical

Significant diversification

The 3 months correlation between Resources and SBC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Resources Connection and SBC Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC Medical Group 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 SBC Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC Medical Group has no effect on the direction of Resources Connection i.e., Resources Connection and SBC Medical go up and down completely randomly.

Pair Corralation between Resources Connection and SBC Medical

Considering the 90-day investment horizon Resources Connection is expected to generate 0.44 times more return on investment than SBC Medical. However, Resources Connection is 2.28 times less risky than SBC Medical. It trades about 0.15 of its potential returns per unit of risk. SBC Medical Group is currently generating about -0.14 per unit of risk. If you would invest  857.00  in Resources Connection on October 8, 2024 and sell it today you would earn a total of  51.00  from holding Resources Connection or generate 5.95% return on investment over 90 days.

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

Resources Connection  vs.  SBC Medical Group

Resources Connection

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Resources Connection are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Resources Connection may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SBC Medical Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Resources Connection and SBC Medical

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

The idea behind Resources Connection and SBC Medical Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.