Correlation Between RMB Holdings and Adcock Ingram

Can any of the company-specific risk be diversified away by investing in both RMB Holdings and Adcock Ingram 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 RMB Holdings and Adcock Ingram into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RMB Holdings and Adcock Ingram Holdings, you can compare the effects of market volatilities on RMB Holdings and Adcock Ingram 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 RMB Holdings with a short position of Adcock Ingram. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMB Holdings and Adcock Ingram.

Diversification Opportunities for RMB Holdings and Adcock Ingram

-0.52

Correlation Coefficient

RMB Holdings  Adcock Ingram

Excellent diversification

The 3 months correlation between RMB and Adcock is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding RMB Holdings and Adcock Ingram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adcock Ingram Holdings and RMB Holdings 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 RMB Holdings are associated (or correlated) with Adcock Ingram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adcock Ingram Holdings has no effect on the direction of RMB Holdings i.e., RMB Holdings and Adcock Ingram go up and down completely randomly.

Pair Corralation between RMB Holdings and Adcock Ingram

Assuming the 90 days trading horizon RMB Holdings is expected to generate 0.92 times more return on investment than Adcock Ingram. However, RMB Holdings is 1.09 times less risky than Adcock Ingram. It trades about 0.01 of its potential returns per unit of risk. Adcock Ingram Holdings is currently generating about 0.0 per unit of risk. If you would invest  4,300  in RMB Holdings on October 5, 2024 and sell it today you would earn a total of  0.00  from holding RMB Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

RMB Holdings  vs.  Adcock Ingram Holdings

RMB Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RMB Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, RMB Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Adcock Ingram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adcock Ingram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Adcock Ingram is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RMB Holdings and Adcock Ingram

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

The idea behind RMB Holdings and Adcock Ingram Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.