Correlation Between Rico Auto and 360 ONE

Can any of the company-specific risk be diversified away by investing in both Rico Auto and 360 ONE 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 Rico Auto and 360 ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rico Auto Industries and 360 ONE WAM, you can compare the effects of market volatilities on Rico Auto and 360 ONE 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 Rico Auto with a short position of 360 ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rico Auto and 360 ONE.

Diversification Opportunities for Rico Auto and 360 ONE

-0.37

Correlation Coefficient

Rico Auto  360 ONE

Very good diversification

The 3 months correlation between Rico and 360 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rico Auto Industries and 360 ONE WAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 ONE WAM and Rico Auto 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 Rico Auto Industries are associated (or correlated) with 360 ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 ONE WAM has no effect on the direction of Rico Auto i.e., Rico Auto and 360 ONE go up and down completely randomly.

Pair Corralation between Rico Auto and 360 ONE

Assuming the 90 days trading horizon Rico Auto is expected to generate 4.13 times less return on investment than 360 ONE. In addition to that, Rico Auto is 1.46 times more volatile than 360 ONE WAM. It trades about 0.02 of its total potential returns per unit of risk. 360 ONE WAM is currently generating about 0.11 per unit of volatility. If you would invest  42,474  in 360 ONE WAM on September 23, 2024 and sell it today you would earn a total of  82,476  from holding 360 ONE WAM or generate 194.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

Rico Auto Industries  vs.  360 ONE WAM

Rico Auto Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rico Auto Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

360 ONE WAM

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 360 ONE WAM are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, 360 ONE sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rico Auto and 360 ONE

The main advantage of trading using opposite Rico Auto and 360 ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rico Auto position performs unexpectedly, 360 ONE 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 360 ONE will offset losses from the drop in 360 ONE's long position.

The idea behind Rico Auto Industries and 360 ONE WAM 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.