Correlation Between Rubicon Organics and CHAR Technologies

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

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

Diversification Opportunities for Rubicon Organics and CHAR Technologies

-0.02

Correlation Coefficient

Rubicon Organics  CHAR Technologies

Good diversification

The 3 months correlation between Rubicon and CHAR is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and CHAR Technologies go up and down completely randomly.

Pair Corralation between Rubicon Organics and CHAR Technologies

Assuming the 90 days trading horizon Rubicon Organics is expected to generate 1.01 times more return on investment than CHAR Technologies. However, Rubicon Organics is 1.01 times more volatile than CHAR Technologies. It trades about 0.07 of its potential returns per unit of risk. CHAR Technologies is currently generating about 0.06 per unit of risk. If you would invest  45.00  in Rubicon Organics on December 22, 2024 and sell it today you would earn a total of  7.00  from holding Rubicon Organics or generate 15.56% return on investment over 90 days.

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

Rubicon Organics  vs.  CHAR Technologies

Rubicon Organics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Organics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, Rubicon Organics showed solid returns over the last few months and may actually be approaching a breakup point.

CHAR Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CHAR Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CHAR Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rubicon Organics and CHAR Technologies

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

The idea behind Rubicon Organics and CHAR Technologies 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.