Correlation Between RALPH and Marine Products

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

By analyzing existing cross correlation between RALPH LAUREN P and Marine Products, you can compare the effects of market volatilities on RALPH and Marine Products 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 RALPH with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of RALPH and Marine Products.

Diversification Opportunities for RALPH and Marine Products

-0.55

Correlation Coefficient

RALPH  Marine Products

Excellent diversification

The 3 months correlation between RALPH and Marine is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding RALPH LAUREN P and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and RALPH 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 RALPH LAUREN P are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of RALPH i.e., RALPH and Marine Products go up and down completely randomly.

Pair Corralation between RALPH and Marine Products

Assuming the 90 days trading horizon RALPH LAUREN P is expected to under-perform the Marine Products. But the bond apears to be less risky and, when comparing its historical volatility, RALPH LAUREN P is 5.15 times less risky than Marine Products. The bond trades about -0.08 of its potential returns per unit of risk. The Marine Products is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  919.00  in Marine Products on September 4, 2024 and sell it today you would earn a total of  85.00  from holding Marine Products or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

RALPH LAUREN P  vs.  Marine Products

RALPH LAUREN P

Risk-Adjusted Performance

0 of 100

Very Weak

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

Marine Products

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marine Products may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RALPH and Marine Products

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

The idea behind RALPH LAUREN P and Marine Products 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.