Correlation Between RCI Hospitality and DAIRY FARM

Can any of the company-specific risk be diversified away by investing in both RCI Hospitality and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on RCI Hospitality and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCI Hospitality and DAIRY FARM.

Diversification Opportunities for RCI Hospitality and DAIRY FARM

-0.02

Correlation Coefficient

RCI Hospitality  DAIRY FARM

Good diversification

The 3 months correlation between RCI and DAIRY is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding RCI Hospitality Holdings and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of RCI Hospitality i.e., RCI Hospitality and DAIRY FARM go up and down completely randomly.

Pair Corralation between RCI Hospitality and DAIRY FARM

Assuming the 90 days trading horizon RCI Hospitality is expected to generate 123.03 times less return on investment than DAIRY FARM. In addition to that, RCI Hospitality is 1.0 times more volatile than DAIRY FARM INTL. It trades about 0.0 of its total potential returns per unit of risk. DAIRY FARM INTL is currently generating about 0.21 per unit of volatility. If you would invest  214.00  in DAIRY FARM INTL on April 24, 2025 and sell it today you would earn a total of  70.00  from holding DAIRY FARM INTL or generate 32.71% return on investment over 90 days.

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

RCI Hospitality Holdings  vs.  DAIRY FARM INTL

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

DAIRY FARM INTL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCI Hospitality and DAIRY FARM

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

The idea behind RCI Hospitality Holdings and DAIRY FARM INTL 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..