Correlation Between RCI Hospitality and Capitalworks Emerging

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

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

Diversification Opportunities for RCI Hospitality and Capitalworks Emerging

0.04

Correlation Coefficient

RCI Hospitality  Capitalworks Emerging

Significant diversification

The 3 months correlation between RCI and Capitalworks is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Capitalworks Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitalworks Emerging and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with Capitalworks Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitalworks Emerging has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Capitalworks Emerging go up and down completely randomly.

Pair Corralation between RCI Hospitality and Capitalworks Emerging

If you would invest  5,202  in RCI Hospitality Holdings on October 11, 2024 and sell it today you would earn a total of  456.00  from holding RCI Hospitality Holdings or generate 8.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Capitalworks Emerging Markets

RCI Hospitality Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, RCI Hospitality disclosed solid returns over the last few months and may actually be approaching a breakup point.

Capitalworks Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capitalworks Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capitalworks Emerging is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RCI Hospitality and Capitalworks Emerging

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

The idea behind RCI Hospitality Holdings and Capitalworks Emerging Markets 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.