Correlation Between Rubicon Organics and Converge Technology

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

By analyzing existing cross correlation between Rubicon Organics and Converge Technology Solutions, you can compare the effects of market volatilities on Rubicon Organics and Converge Technology 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 Rubicon Organics with a short position of Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rubicon Organics and Converge Technology.

Diversification Opportunities for Rubicon Organics and Converge Technology

0.63

Correlation Coefficient

Rubicon Organics  Converge Technology

Poor diversification

The 3 months correlation between Rubicon and Converge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Rubicon Organics and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology and Rubicon Organics 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 Rubicon Organics are associated (or correlated) with Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Rubicon Organics i.e., Rubicon Organics and Converge Technology go up and down completely randomly.

Pair Corralation between Rubicon Organics and Converge Technology

Assuming the 90 days trading horizon Rubicon Organics is expected to under-perform the Converge Technology. In addition to that, Rubicon Organics is 1.13 times more volatile than Converge Technology Solutions. It trades about -0.1 of its total potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.08 per unit of volatility. If you would invest  440.00  in Converge Technology Solutions on September 2, 2024 and sell it today you would lose (104.00) from holding Converge Technology Solutions or give up 23.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Rubicon Organics  vs.  Converge Technology Solutions

Rubicon Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rubicon Organics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Converge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Converge Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Rubicon Organics and Converge Technology

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

The idea behind Rubicon Organics and Converge Technology Solutions 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 Anywhere module to track or share privately all of your investments from the convenience of any device.