Correlation Between Steel Partners and RCM Technologies
Can any of the company-specific risk be diversified away by investing in both Steel Partners and RCM Technologies 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 Steel Partners and RCM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Partners Holdings and RCM Technologies, you can compare the effects of market volatilities on Steel Partners and RCM Technologies 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 Steel Partners with a short position of RCM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Partners and RCM Technologies.
Diversification Opportunities for Steel Partners and RCM Technologies
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Steel and RCM is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Steel Partners Holdings and RCM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCM Technologies and Steel Partners 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 Steel Partners Holdings are associated (or correlated) with RCM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCM Technologies has no effect on the direction of Steel Partners i.e., Steel Partners and RCM Technologies go up and down completely randomly.
Pair Corralation between Steel Partners and RCM Technologies
Given the investment horizon of 90 days Steel Partners is expected to generate 1.01 times less return on investment than RCM Technologies. In addition to that, Steel Partners is 1.23 times more volatile than RCM Technologies. It trades about 0.09 of its total potential returns per unit of risk. RCM Technologies is currently generating about 0.11 per unit of volatility. If you would invest 1,981 in RCM Technologies on September 3, 2024 and sell it today you would earn a total of 318.00 from holding RCM Technologies or generate 16.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Steel Partners Holdings vs. RCM Technologies
Performance |
Timeline |
Steel Partners Holdings |
RCM Technologies |
Steel Partners and RCM Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Steel Partners and RCM Technologies
The main advantage of trading using opposite Steel Partners and RCM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Partners position performs unexpectedly, RCM Technologies 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 RCM Technologies will offset losses from the drop in RCM Technologies' long position.Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Compass Diversified | Steel Partners vs. Tejon Ranch Co |
RCM Technologies vs. Matthews International | RCM Technologies vs. Mammoth Energy Services | RCM Technologies vs. Griffon | RCM Technologies vs. Steel Partners Holdings |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |