Correlation Between 00108WAF7 and RCM Technologies

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and RCM 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 00108WAF7 and RCM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and RCM Technologies, you can compare the effects of market volatilities on 00108WAF7 and RCM 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 00108WAF7 with a short position of RCM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and RCM Technologies.

Diversification Opportunities for 00108WAF7 and RCM Technologies

0.37

Correlation Coefficient

00108WAF7  RCM Technologies

Weak diversification

The 3 months correlation between 00108WAF7 and RCM is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and 00108WAF7 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 AEP TEX INC are associated (or correlated) with RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and RCM Technologies go up and down completely randomly.

Pair Corralation between 00108WAF7 and RCM Technologies

Assuming the 90 days trading horizon AEP TEX INC is expected to under-perform the RCM Technologies. But the bond apears to be less risky and, when comparing its historical volatility, AEP TEX INC is 1.8 times less risky than RCM Technologies. The bond trades about -0.04 of its potential returns per unit of risk. The RCM Technologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,875  in RCM Technologies on December 10, 2024 and sell it today you would lose (102.00) from holding RCM Technologies or give up 5.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	71.54%
Values	Daily Returns

AEP TEX INC  vs.  RCM Technologies

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

RCM Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCM Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with 00108WAF7 and RCM Technologies

The main advantage of trading using opposite 00108WAF7 and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, RCM 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 RCM Technologies will offset losses from the drop in RCM Technologies' long position.

The idea behind AEP TEX INC and RCM 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.