Correlation Between RFM Corp and Concepcion Industrial

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

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

Diversification Opportunities for RFM Corp and Concepcion Industrial

-0.75

Correlation Coefficient

RFM Corp  Concepcion Industrial

Pay attention - limited upside

The 3 months correlation between RFM and Concepcion is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding RFM Corp and Concepcion Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concepcion Industrial 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 Concepcion Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concepcion Industrial has no effect on the direction of RFM Corp i.e., RFM Corp and Concepcion Industrial go up and down completely randomly.

Pair Corralation between RFM Corp and Concepcion Industrial

Assuming the 90 days trading horizon RFM Corp is expected to generate 0.82 times more return on investment than Concepcion Industrial. However, RFM Corp is 1.23 times less risky than Concepcion Industrial. It trades about 0.07 of its potential returns per unit of risk. Concepcion Industrial Corp is currently generating about -0.07 per unit of risk. If you would invest  366.00  in RFM Corp on September 26, 2024 and sell it today you would earn a total of  19.00  from holding RFM Corp or generate 5.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

RFM Corp  vs.  Concepcion Industrial Corp

RFM Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RFM Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, RFM Corp is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concepcion Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with RFM Corp and Concepcion Industrial

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

The idea behind RFM Corp and Concepcion Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.