Correlation Between RCI Hospitality and SHIP HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and SHIP HEALTHCARE 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 RCI Hospitality and SHIP HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCI Hospitality Holdings and SHIP HEALTHCARE HLDGINC, you can compare the effects of market volatilities on RCI Hospitality and SHIP HEALTHCARE 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 RCI Hospitality with a short position of SHIP HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and SHIP HEALTHCARE.

Diversification Opportunities for RCI Hospitality and SHIP HEALTHCARE

0.12

Correlation Coefficient

RCI Hospitality  SHIP HEALTHCARE

Average diversification

The 3 months correlation between RCI and SHIP is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and SHIP HEALTHCARE HLDGINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIP HEALTHCARE HLDGINC and RCI Hospitality 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 RCI Hospitality Holdings are associated (or correlated) with SHIP HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIP HEALTHCARE HLDGINC has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and SHIP HEALTHCARE go up and down completely randomly.

Pair Corralation between RCI Hospitality and SHIP HEALTHCARE

Assuming the 90 days trading horizon RCI Hospitality Holdings is expected to generate 1.04 times more return on investment than SHIP HEALTHCARE. However, RCI Hospitality is 1.04 times more volatile than SHIP HEALTHCARE HLDGINC. It trades about -0.04 of its potential returns per unit of risk. SHIP HEALTHCARE HLDGINC is currently generating about -0.06 per unit of risk. If you would invest  3,444  in RCI Hospitality Holdings on April 23, 2025 and sell it today you would lose (224.00) from holding RCI Hospitality Holdings or give up 6.5% of portfolio value over 90 days.

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

RCI Hospitality Holdings  vs.  SHIP HEALTHCARE HLDGINC

RCI Hospitality Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days RCI Hospitality Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, RCI Hospitality is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with RCI Hospitality and SHIP HEALTHCARE

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

The idea behind RCI Hospitality Holdings and SHIP HEALTHCARE HLDGINC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.