Correlation Between Rimini Street and ISDR Old

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

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

Diversification Opportunities for Rimini Street and ISDR Old

-0.54

Correlation Coefficient

Rimini Street  ISDR Old

Excellent diversification

The 3 months correlation between Rimini and ISDR is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Rimini Street and ISDR Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISDR Old and Rimini Street 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 Rimini Street are associated (or correlated) with ISDR Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISDR Old has no effect on the direction of Rimini Street i.e., Rimini Street and ISDR Old go up and down completely randomly.

Pair Corralation between Rimini Street and ISDR Old

Given the investment horizon of 90 days Rimini Street is expected to generate 2.6 times more return on investment than ISDR Old. However, Rimini Street is 2.6 times more volatile than ISDR Old. It trades about 0.17 of its potential returns per unit of risk. ISDR Old is currently generating about 0.01 per unit of risk. If you would invest  211.00  in Rimini Street on December 1, 2024 and sell it today you would earn a total of  144.00  from holding Rimini Street or generate 68.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	61.67%
Values	Daily Returns

Rimini Street  vs.  ISDR Old

Rimini Street

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rimini Street are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Rimini Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

ISDR Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days ISDR Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ISDR Old is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Rimini Street and ISDR Old

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

The idea behind Rimini Street and ISDR Old 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.