Correlation Between Colgate Palmolive and Raytech Holding

Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and Raytech Holding 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 Colgate Palmolive and Raytech Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Colgate Palmolive and Raytech Holding Limited, you can compare the effects of market volatilities on Colgate Palmolive and Raytech Holding 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 Colgate Palmolive with a short position of Raytech Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and Raytech Holding.

Diversification Opportunities for Colgate Palmolive and Raytech Holding

-0.5

Correlation Coefficient

Colgate Palmolive  Raytech Holding

Very good diversification

The 3 months correlation between Colgate and Raytech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and Raytech Holding Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytech Holding and Colgate Palmolive 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 Colgate Palmolive are associated (or correlated) with Raytech Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytech Holding has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and Raytech Holding go up and down completely randomly.

Pair Corralation between Colgate Palmolive and Raytech Holding

Allowing for the 90-day total investment horizon Colgate Palmolive is expected to under-perform the Raytech Holding. But the stock apears to be less risky and, when comparing its historical volatility, Colgate Palmolive is 9.12 times less risky than Raytech Holding. The stock trades about -0.11 of its potential returns per unit of risk. The Raytech Holding Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Raytech Holding Limited on May 20, 2025 and sell it today you would earn a total of  111.00  from holding Raytech Holding Limited or generate 61.33% return on investment over 90 days.

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

Colgate Palmolive  vs.  Raytech Holding Limited

Colgate Palmolive

Risk-Adjusted Performance

Weakest

Over the last 90 days Colgate Palmolive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Raytech Holding

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Raytech Holding Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Raytech Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Colgate Palmolive and Raytech Holding

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

The idea behind Colgate Palmolive and Raytech Holding Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..