Correlation Between RFM Corp and Axelum Resources

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

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

Diversification Opportunities for RFM Corp and Axelum Resources

-0.47

Correlation Coefficient

RFM Corp  Axelum Resources

Very good diversification

The 3 months correlation between RFM and Axelum is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding RFM Corp and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp and RFM Corp 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 RFM Corp are associated (or correlated) with Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of RFM Corp i.e., RFM Corp and Axelum Resources go up and down completely randomly.

Pair Corralation between RFM Corp and Axelum Resources

Assuming the 90 days trading horizon RFM Corp is expected to generate 0.64 times more return on investment than Axelum Resources. However, RFM Corp is 1.57 times less risky than Axelum Resources. It trades about 0.04 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about 0.0 per unit of risk. If you would invest  295.00  in RFM Corp on September 23, 2024 and sell it today you would earn a total of  94.00  from holding RFM Corp or generate 31.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.84%
Values	Daily Returns

RFM Corp  vs.  Axelum Resources Corp

RFM Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RFM Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, RFM Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Axelum Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RFM Corp and Axelum Resources

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

The idea behind RFM Corp and Axelum Resources Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.