Correlation Between RCI Hospitality and Telix Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and Telix Pharmaceuticals 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 Telix Pharmaceuticals 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 Telix Pharmaceuticals Limited, you can compare the effects of market volatilities on RCI Hospitality and Telix Pharmaceuticals 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 Telix Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and Telix Pharmaceuticals.

Diversification Opportunities for RCI Hospitality and Telix Pharmaceuticals

0.15

Correlation Coefficient

RCI Hospitality  Telix Pharmaceuticals

Average diversification

The 3 months correlation between RCI and Telix is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between RCI Hospitality and Telix Pharmaceuticals

Given the investment horizon of 90 days RCI Hospitality Holdings is expected to generate 0.93 times more return on investment than Telix Pharmaceuticals. However, RCI Hospitality Holdings is 1.08 times less risky than Telix Pharmaceuticals. It trades about 0.22 of its potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.0 per unit of risk. If you would invest  4,144  in RCI Hospitality Holdings on October 8, 2024 and sell it today you would earn a total of  1,512  from holding RCI Hospitality Holdings or generate 36.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	56.45%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Telix Pharmaceuticals Limited

RCI Hospitality Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in RCI Hospitality Holdings are ranked lower than 17 (%) 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.

Telix Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telix Pharmaceuticals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Telix Pharmaceuticals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with RCI Hospitality and Telix Pharmaceuticals

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

The idea behind RCI Hospitality Holdings and Telix Pharmaceuticals Limited 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.