Correlation Between RH and Reitar Logtech

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

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

Diversification Opportunities for RH and Reitar Logtech

-0.62

Correlation Coefficient

RH  Reitar Logtech

Excellent diversification

The 3 months correlation between RH and Reitar is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding RH and Reitar Logtech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reitar Logtech Holdings and RH 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 RH are associated (or correlated) with Reitar Logtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reitar Logtech Holdings has no effect on the direction of RH i.e., RH and Reitar Logtech go up and down completely randomly.

Pair Corralation between RH and Reitar Logtech

Allowing for the 90-day total investment horizon RH is expected to generate 1.21 times more return on investment than Reitar Logtech. However, RH is 1.21 times more volatile than Reitar Logtech Holdings. It trades about 0.07 of its potential returns per unit of risk. Reitar Logtech Holdings is currently generating about -0.21 per unit of risk. If you would invest  39,678  in RH on October 9, 2024 and sell it today you would earn a total of  1,818  from holding RH or generate 4.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

RH  vs.  Reitar Logtech Holdings

RH

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RH are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, RH demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Reitar Logtech Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reitar Logtech Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Reitar Logtech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RH and Reitar Logtech

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

The idea behind RH and Reitar Logtech Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.