Correlation Between RCI Hospitality and Akamai Technologies

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

Diversification Opportunities for RCI Hospitality and Akamai Technologies

-0.3

Correlation Coefficient

RCI Hospitality  Akamai Technologies

Very good diversification

The 3 months correlation between RCI and Akamai is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies 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 Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Akamai Technologies go up and down completely randomly.

Pair Corralation between RCI Hospitality and Akamai Technologies

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 1.24 times more return on investment than Akamai Technologies. However, RCI Hospitality is 1.24 times more volatile than Akamai Technologies. It trades about 0.2 of its potential returns per unit of risk. Akamai Technologies is currently generating about 0.1 per unit of risk. If you would invest  4,723  in RCI Hospitality Holdings on October 11, 2024 and sell it today you would earn a total of  787.00  from holding RCI Hospitality Holdings or generate 16.66% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  Akamai Technologies

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. In spite of comparatively fragile basic indicators, RCI Hospitality unveiled solid returns over the last few months and may actually be approaching a breakup point.

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Akamai Technologies 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 Akamai Technologies

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

The idea behind RCI Hospitality Holdings and Akamai Technologies 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.