Correlation Between RFM Corp and Cirtek Holdings

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

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

Diversification Opportunities for RFM Corp and Cirtek Holdings

-0.44

Correlation Coefficient

RFM Corp  Cirtek Holdings

Very good diversification

The 3 months correlation between RFM and Cirtek is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding RFM Corp and Cirtek Holdings Philippines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cirtek Holdings Phil 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 Cirtek Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cirtek Holdings Phil has no effect on the direction of RFM Corp i.e., RFM Corp and Cirtek Holdings go up and down completely randomly.

Pair Corralation between RFM Corp and Cirtek Holdings

Assuming the 90 days trading horizon RFM Corp is expected to generate 0.13 times more return on investment than Cirtek Holdings. However, RFM Corp is 7.81 times less risky than Cirtek Holdings. It trades about 0.08 of its potential returns per unit of risk. Cirtek Holdings Philippines is currently generating about -0.02 per unit of risk. If you would invest  366.00  in RFM Corp on September 24, 2024 and sell it today you would earn a total of  23.00  from holding RFM Corp or generate 6.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	32.81%
Values	Daily Returns

RFM Corp  vs.  Cirtek Holdings Philippines

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.

Cirtek Holdings Phil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cirtek Holdings Philippines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with RFM Corp and Cirtek Holdings

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

The idea behind RFM Corp and Cirtek Holdings Philippines 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.