Correlation Between Brickworks and Ras Technology

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

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

Diversification Opportunities for Brickworks and Ras Technology

0.7

Correlation Coefficient

Brickworks  Ras Technology

Poor diversification

The 3 months correlation between Brickworks and Ras is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brickworks and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology Holdings and Brickworks 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 Brickworks are associated (or correlated) with Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of Brickworks i.e., Brickworks and Ras Technology go up and down completely randomly.

Pair Corralation between Brickworks and Ras Technology

Assuming the 90 days trading horizon Brickworks is expected to generate 0.39 times more return on investment than Ras Technology. However, Brickworks is 2.59 times less risky than Ras Technology. It trades about -0.01 of its potential returns per unit of risk. Ras Technology Holdings is currently generating about -0.23 per unit of risk. If you would invest  2,618  in Brickworks on September 25, 2024 and sell it today you would lose (41.00) from holding Brickworks or give up 1.57% of portfolio value over 90 days.

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

Brickworks  vs.  Ras Technology Holdings

Brickworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brickworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Brickworks is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ras Technology Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Brickworks and Ras Technology

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

The idea behind Brickworks and Ras Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.