Correlation Between Raytech Holding and Bloomberg Commodity

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

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

Diversification Opportunities for Raytech Holding and Bloomberg Commodity

0.13

Correlation Coefficient

Raytech Holding  Bloomberg Commodity

Average diversification

The 3 months correlation between Raytech and Bloomberg is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Bloomberg Commodity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomberg Commodity and Raytech Holding 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 Raytech Holding Limited are associated (or correlated) with Bloomberg Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomberg Commodity has no effect on the direction of Raytech Holding i.e., Raytech Holding and Bloomberg Commodity go up and down completely randomly.

Pair Corralation between Raytech Holding and Bloomberg Commodity

Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Bloomberg Commodity. In addition to that, Raytech Holding is 6.68 times more volatile than Bloomberg Commodity. It trades about -0.03 of its total potential returns per unit of risk. Bloomberg Commodity is currently generating about 0.04 per unit of volatility. If you would invest  9,675  in Bloomberg Commodity on September 16, 2024 and sell it today you would earn a total of  192.00  from holding Bloomberg Commodity or generate 1.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Raytech Holding Limited  vs.  Bloomberg Commodity

Pair Trading with Raytech Holding and Bloomberg Commodity

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

The idea behind Raytech Holding Limited and Bloomberg Commodity 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.