Correlation Between Rapac Communication and Peninsula

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

By analyzing existing cross correlation between Rapac Communication Infrastructure and Peninsula Group, you can compare the effects of market volatilities on Rapac Communication and Peninsula 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 Rapac Communication with a short position of Peninsula. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapac Communication and Peninsula.

Diversification Opportunities for Rapac Communication and Peninsula

0.69

Correlation Coefficient

Rapac Communication  Peninsula

Poor diversification

The 3 months correlation between Rapac and Peninsula is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Rapac Communication Infrastruc and Peninsula Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Group and Rapac Communication 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 Rapac Communication Infrastructure are associated (or correlated) with Peninsula. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Group has no effect on the direction of Rapac Communication i.e., Rapac Communication and Peninsula go up and down completely randomly.

Pair Corralation between Rapac Communication and Peninsula

Assuming the 90 days trading horizon Rapac Communication Infrastructure is expected to under-perform the Peninsula. But the stock apears to be less risky and, when comparing its historical volatility, Rapac Communication Infrastructure is 1.31 times less risky than Peninsula. The stock trades about -0.01 of its potential returns per unit of risk. The Peninsula Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  15,660  in Peninsula Group on September 2, 2024 and sell it today you would earn a total of  4,770  from holding Peninsula Group or generate 30.46% return on investment over 90 days.

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

Rapac Communication Infrastruc  vs.  Peninsula Group

Rapac Communication

Risk-Adjusted Performance

0 of 100

Very Weak

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

Peninsula Group

Risk-Adjusted Performance

27 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Group are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Peninsula sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rapac Communication and Peninsula

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

The idea behind Rapac Communication Infrastructure and Peninsula Group 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..