Correlation Between SCHMID Group and RF Industries

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

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

Diversification Opportunities for SCHMID Group and RF Industries

-0.09

Correlation Coefficient

SCHMID Group  RF Industries

Good diversification

The 3 months correlation between SCHMID and RFIL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding SCHMID Group NV and RF Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF Industries and SCHMID Group 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 SCHMID Group NV are associated (or correlated) with RF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Industries has no effect on the direction of SCHMID Group i.e., SCHMID Group and RF Industries go up and down completely randomly.

Pair Corralation between SCHMID Group and RF Industries

Given the investment horizon of 90 days SCHMID Group is expected to generate 1.66 times less return on investment than RF Industries. In addition to that, SCHMID Group is 1.28 times more volatile than RF Industries. It trades about 0.05 of its total potential returns per unit of risk. RF Industries is currently generating about 0.11 per unit of volatility. If you would invest  383.00  in RF Industries on December 27, 2024 and sell it today you would earn a total of  106.00  from holding RF Industries or generate 27.68% return on investment over 90 days.

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

SCHMID Group NV  vs.  RF Industries

SCHMID Group NV

Risk-Adjusted Performance

Insignificant

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

RF Industries

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RF Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain forward indicators, RF Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SCHMID Group and RF Industries

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

The idea behind SCHMID Group NV and RF Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.