Correlation Between RMB Holdings and Gemfields
Can any of the company-specific risk be diversified away by investing in both RMB Holdings and Gemfields 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 Gemfields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RMB Holdings and Gemfields Group, you can compare the effects of market volatilities on RMB Holdings and Gemfields 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 Gemfields. Check out your portfolio center. Please also check ongoing floating volatility patterns of RMB Holdings and Gemfields.
Diversification Opportunities for RMB Holdings and Gemfields
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between RMB and Gemfields is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding RMB Holdings and Gemfields Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemfields Group 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 Gemfields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemfields Group has no effect on the direction of RMB Holdings i.e., RMB Holdings and Gemfields go up and down completely randomly.
Pair Corralation between RMB Holdings and Gemfields
Assuming the 90 days trading horizon RMB Holdings is expected to generate 0.23 times more return on investment than Gemfields. However, RMB Holdings is 4.32 times less risky than Gemfields. It trades about 0.16 of its potential returns per unit of risk. Gemfields Group is currently generating about -0.15 per unit of risk. If you would invest 4,200 in RMB Holdings on September 24, 2024 and sell it today you would earn a total of 200.00 from holding RMB Holdings or generate 4.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RMB Holdings vs. Gemfields Group
Performance |
Timeline |
RMB Holdings |
Gemfields Group |
RMB Holdings and Gemfields Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RMB Holdings and Gemfields
The main advantage of trading using opposite RMB Holdings and Gemfields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RMB Holdings position performs unexpectedly, Gemfields 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 Gemfields will offset losses from the drop in Gemfields' long position.RMB Holdings vs. ABSA Bank Limited | RMB Holdings vs. Capitec Bank Holdings | RMB Holdings vs. Standard Bank Group | RMB Holdings vs. Capitec Bank Holdings |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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