Correlation Between RCI Hospitality and Ipsen SA

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

Diversification Opportunities for RCI Hospitality and Ipsen SA

0.38

Correlation Coefficient

RCI Hospitality  Ipsen SA

Weak diversification

The 3 months correlation between RCI and Ipsen is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and Ipsen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ipsen SA 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 Ipsen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ipsen SA has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and Ipsen SA go up and down completely randomly.

Pair Corralation between RCI Hospitality and Ipsen SA

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to under-perform the Ipsen SA. In addition to that, RCI Hospitality is 1.24 times more volatile than Ipsen SA. It trades about -0.24 of its total potential returns per unit of risk. Ipsen SA is currently generating about 0.04 per unit of volatility. If you would invest  10,750  in Ipsen SA on December 19, 2024 and sell it today you would earn a total of  300.00  from holding Ipsen SA or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

RCI Hospitality Holdings  vs.  Ipsen SA

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

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

Ipsen SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ipsen SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ipsen SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RCI Hospitality and Ipsen SA

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

The idea behind RCI Hospitality Holdings and Ipsen SA 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .