Correlation Between RMB Holdings and Trellidor Holdings

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

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

Diversification Opportunities for RMB Holdings and Trellidor Holdings

-0.66

Correlation Coefficient

RMB Holdings  Trellidor Holdings

Excellent diversification

The 3 months correlation between RMB and Trellidor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding RMB Holdings and Trellidor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trellidor 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 Trellidor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trellidor Holdings has no effect on the direction of RMB Holdings i.e., RMB Holdings and Trellidor Holdings go up and down completely randomly.

Pair Corralation between RMB Holdings and Trellidor Holdings

Assuming the 90 days trading horizon RMB Holdings is expected to generate 0.67 times more return on investment than Trellidor Holdings. However, RMB Holdings is 1.48 times less risky than Trellidor Holdings. It trades about 0.07 of its potential returns per unit of risk. Trellidor Holdings is currently generating about -0.12 per unit of risk. If you would invest  4,100  in RMB Holdings on October 6, 2024 and sell it today you would earn a total of  200.00  from holding RMB Holdings or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.56%
Values	Daily Returns

RMB Holdings  vs.  Trellidor Holdings

RMB Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RMB Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, RMB Holdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Trellidor Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellidor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with RMB Holdings and Trellidor Holdings

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

The idea behind RMB Holdings and Trellidor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.