Correlation Between Workforce Holdings and RMB Holdings

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

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

Diversification Opportunities for Workforce Holdings and RMB Holdings

-0.45

Correlation Coefficient

Workforce Holdings  RMB Holdings

Very good diversification

The 3 months correlation between Workforce and RMB is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Workforce Holdings and RMB Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMB Holdings and Workforce Holdings 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 Workforce Holdings are associated (or correlated) with RMB Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMB Holdings has no effect on the direction of Workforce Holdings i.e., Workforce Holdings and RMB Holdings go up and down completely randomly.

Pair Corralation between Workforce Holdings and RMB Holdings

Assuming the 90 days trading horizon Workforce Holdings is expected to generate 1.89 times more return on investment than RMB Holdings. However, Workforce Holdings is 1.89 times more volatile than RMB Holdings. It trades about 0.08 of its potential returns per unit of risk. RMB Holdings is currently generating about 0.04 per unit of risk. If you would invest  10,100  in Workforce Holdings on September 24, 2024 and sell it today you would earn a total of  4,500  from holding Workforce Holdings or generate 44.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.39%
Values	Daily Returns

Workforce Holdings  vs.  RMB Holdings

Workforce Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Workforce Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

RMB Holdings

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Workforce Holdings and RMB Holdings

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

The idea behind Workforce Holdings and RMB Holdings 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.