Correlation Between RCM TECHNOLOGIES and SOS

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

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

Diversification Opportunities for RCM TECHNOLOGIES and SOS

-0.53

Correlation Coefficient

RCM TECHNOLOGIES  SOS

Excellent diversification

The 3 months correlation between RCM and SOS is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and SOS LTD A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOS LTD A and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES are associated (or correlated) with SOS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOS LTD A has no effect on the direction of RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and SOS go up and down completely randomly.

Pair Corralation between RCM TECHNOLOGIES and SOS

Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 99.2 times less return on investment than SOS. But when comparing it to its historical volatility, RCM TECHNOLOGIES is 13.72 times less risky than SOS. It trades about 0.01 of its potential returns per unit of risk. SOS LTD A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  710.00  in SOS LTD A on September 27, 2024 and sell it today you would lose (55.00) from holding SOS LTD A or give up 7.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

RCM TECHNOLOGIES  vs.  SOS LTD A

RCM TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days RCM TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile basic indicators, RCM TECHNOLOGIES exhibited solid returns over the last few months and may actually be approaching a breakup point.

SOS LTD A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOS LTD A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RCM TECHNOLOGIES and SOS

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

The idea behind RCM TECHNOLOGIES and SOS LTD A 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.