Correlation Between RLF AgTech and BSP Financial

Can any of the company-specific risk be diversified away by investing in both RLF AgTech and BSP Financial 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 RLF AgTech and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RLF AgTech and BSP Financial Group, you can compare the effects of market volatilities on RLF AgTech and BSP Financial 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 RLF AgTech with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLF AgTech and BSP Financial.

Diversification Opportunities for RLF AgTech and BSP Financial

-0.39

Correlation Coefficient

RLF AgTech  BSP Financial

Very good diversification

The 3 months correlation between RLF and BSP is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding RLF AgTech and BSP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSP Financial Group and RLF AgTech 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 RLF AgTech are associated (or correlated) with BSP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSP Financial Group has no effect on the direction of RLF AgTech i.e., RLF AgTech and BSP Financial go up and down completely randomly.

Pair Corralation between RLF AgTech and BSP Financial

Assuming the 90 days trading horizon RLF AgTech is expected to generate 1.62 times more return on investment than BSP Financial. However, RLF AgTech is 1.62 times more volatile than BSP Financial Group. It trades about 0.03 of its potential returns per unit of risk. BSP Financial Group is currently generating about 0.04 per unit of risk. If you would invest  4.50  in RLF AgTech on September 12, 2024 and sell it today you would earn a total of  0.10  from holding RLF AgTech or generate 2.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

RLF AgTech  vs.  BSP Financial Group

RLF AgTech

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RLF AgTech are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, RLF AgTech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BSP Financial Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BSP Financial Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, BSP Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RLF AgTech and BSP Financial

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

The idea behind RLF AgTech and BSP Financial Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.