Correlation Between RPM International and Haydale Graphene
Can any of the company-specific risk be diversified away by investing in both RPM International and Haydale Graphene 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 RPM International and Haydale Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RPM International and Haydale Graphene Industries, you can compare the effects of market volatilities on RPM International and Haydale Graphene 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 RPM International with a short position of Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of RPM International and Haydale Graphene.
Diversification Opportunities for RPM International and Haydale Graphene
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RPM and Haydale is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding RPM International and Haydale Graphene Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haydale Graphene Ind and RPM International 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 RPM International are associated (or correlated) with Haydale Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haydale Graphene Ind has no effect on the direction of RPM International i.e., RPM International and Haydale Graphene go up and down completely randomly.
Pair Corralation between RPM International and Haydale Graphene
Considering the 90-day investment horizon RPM International is expected to under-perform the Haydale Graphene. But the stock apears to be less risky and, when comparing its historical volatility, RPM International is 14.27 times less risky than Haydale Graphene. The stock trades about -0.15 of its potential returns per unit of risk. The Haydale Graphene Industries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.24 in Haydale Graphene Industries on December 2, 2024 and sell it today you would lose (0.08) from holding Haydale Graphene Industries or give up 33.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RPM International vs. Haydale Graphene Industries
Performance |
Timeline |
RPM International |
Haydale Graphene Ind |
RPM International and Haydale Graphene Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RPM International and Haydale Graphene
The main advantage of trading using opposite RPM International and Haydale Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RPM International position performs unexpectedly, Haydale Graphene 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 Haydale Graphene will offset losses from the drop in Haydale Graphene's long position.RPM International vs. Innospec | RPM International vs. Minerals Technologies | RPM International vs. Oil Dri | RPM International vs. Quaker Chemical |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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