Correlation Between Robinsons Retail and Converge Information

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

By analyzing existing cross correlation between Robinsons Retail Holdings and Converge Information Communications, you can compare the effects of market volatilities on Robinsons Retail and Converge Information 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 Robinsons Retail with a short position of Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinsons Retail and Converge Information.

Diversification Opportunities for Robinsons Retail and Converge Information

0.36

Correlation Coefficient

Robinsons Retail  Converge Information

Weak diversification

The 3 months correlation between Robinsons and Converge is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Robinsons Retail Holdings and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information and Robinsons Retail 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 Robinsons Retail Holdings are associated (or correlated) with Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Robinsons Retail i.e., Robinsons Retail and Converge Information go up and down completely randomly.

Pair Corralation between Robinsons Retail and Converge Information

Assuming the 90 days trading horizon Robinsons Retail is expected to generate 3.86 times less return on investment than Converge Information. But when comparing it to its historical volatility, Robinsons Retail Holdings is 1.65 times less risky than Converge Information. It trades about 0.04 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,628  in Converge Information Communications on December 26, 2024 and sell it today you would earn a total of  250.00  from holding Converge Information Communications or generate 15.36% return on investment over 90 days.

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

Robinsons Retail Holdings  vs.  Converge Information Communica

Robinsons Retail Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Robinsons Retail Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Robinsons Retail is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Converge Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Converge Information Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Converge Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Robinsons Retail and Converge Information

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

The idea behind Robinsons Retail Holdings and Converge Information Communications 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.