Correlation Between Rimon Consulting and Tectona

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

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

Diversification Opportunities for Rimon Consulting and Tectona

0.05

Correlation Coefficient

Rimon Consulting  Tectona

Significant diversification

The 3 months correlation between Rimon and Tectona is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Rimon Consulting Management and Tectona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectona and Rimon Consulting 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 Rimon Consulting Management are associated (or correlated) with Tectona. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectona has no effect on the direction of Rimon Consulting i.e., Rimon Consulting and Tectona go up and down completely randomly.

Pair Corralation between Rimon Consulting and Tectona

Assuming the 90 days trading horizon Rimon Consulting Management is expected to generate 0.66 times more return on investment than Tectona. However, Rimon Consulting Management is 1.51 times less risky than Tectona. It trades about -0.03 of its potential returns per unit of risk. Tectona is currently generating about -0.19 per unit of risk. If you would invest  442,200  in Rimon Consulting Management on December 22, 2024 and sell it today you would lose (22,400) from holding Rimon Consulting Management or give up 5.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Rimon Consulting Management  vs.  Tectona

Rimon Consulting Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rimon Consulting Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Rimon Consulting is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tectona

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tectona has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rimon Consulting and Tectona

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

The idea behind Rimon Consulting Management and Tectona 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.