Correlation Between RSL Electronics and Panaxia Labs

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

By analyzing existing cross correlation between RSL Electronics and Panaxia Labs Israel, you can compare the effects of market volatilities on RSL Electronics and Panaxia Labs 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 RSL Electronics with a short position of Panaxia Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of RSL Electronics and Panaxia Labs.

Diversification Opportunities for RSL Electronics and Panaxia Labs

-0.51

Correlation Coefficient

RSL Electronics  Panaxia Labs

Excellent diversification

The 3 months correlation between RSL and Panaxia is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding RSL Electronics and Panaxia Labs Israel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panaxia Labs Israel and RSL Electronics 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 RSL Electronics are associated (or correlated) with Panaxia Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panaxia Labs Israel has no effect on the direction of RSL Electronics i.e., RSL Electronics and Panaxia Labs go up and down completely randomly.

Pair Corralation between RSL Electronics and Panaxia Labs

Assuming the 90 days trading horizon RSL Electronics is expected to generate 0.54 times more return on investment than Panaxia Labs. However, RSL Electronics is 1.85 times less risky than Panaxia Labs. It trades about 0.17 of its potential returns per unit of risk. Panaxia Labs Israel is currently generating about 0.07 per unit of risk. If you would invest  70,100  in RSL Electronics on September 26, 2024 and sell it today you would earn a total of  13,420  from holding RSL Electronics or generate 19.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.83%
Values	Daily Returns

RSL Electronics  vs.  Panaxia Labs Israel

RSL Electronics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RSL Electronics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RSL Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Panaxia Labs Israel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panaxia Labs Israel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Panaxia Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RSL Electronics and Panaxia Labs

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

The idea behind RSL Electronics and Panaxia Labs Israel 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.