Correlation Between RPBio and Cuckoo Electronics

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

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

Diversification Opportunities for RPBio and Cuckoo Electronics

0.11

Correlation Coefficient

RPBio  Cuckoo Electronics

Average diversification

The 3 months correlation between RPBio and Cuckoo is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding RPBio Inc and Cuckoo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cuckoo Electronics and RPBio 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 RPBio Inc are associated (or correlated) with Cuckoo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cuckoo Electronics has no effect on the direction of RPBio i.e., RPBio and Cuckoo Electronics go up and down completely randomly.

Pair Corralation between RPBio and Cuckoo Electronics

Assuming the 90 days trading horizon RPBio Inc is expected to under-perform the Cuckoo Electronics. In addition to that, RPBio is 1.44 times more volatile than Cuckoo Electronics Co. It trades about -0.11 of its total potential returns per unit of risk. Cuckoo Electronics Co is currently generating about -0.07 per unit of volatility. If you would invest  2,465,000  in Cuckoo Electronics Co on September 4, 2024 and sell it today you would lose (175,000) from holding Cuckoo Electronics Co or give up 7.1% of portfolio value over 90 days.

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

RPBio Inc  vs.  Cuckoo Electronics Co

RPBio Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPBio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cuckoo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuckoo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with RPBio and Cuckoo Electronics

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

The idea behind RPBio Inc and Cuckoo Electronics Co 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.