Correlation Between Founder Group and RCL Foods

Can any of the company-specific risk be diversified away by investing in both Founder Group and RCL Foods 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 Founder Group and RCL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Founder Group and RCL Foods

-0.65

Correlation Coefficient

Founder Group  RCL Foods

Excellent diversification

The 3 months correlation between Founder and RCL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Founder Group Limited and RCL Foods Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCL Foods Limited and Founder Group 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 Founder Group Limited are associated (or correlated) with RCL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCL Foods Limited has no effect on the direction of Founder Group i.e., Founder Group and RCL Foods go up and down completely randomly.

Pair Corralation between Founder Group and RCL Foods

Considering the 90-day investment horizon Founder Group Limited is expected to under-perform the RCL Foods. In addition to that, Founder Group is 1.83 times more volatile than RCL Foods Limited. It trades about 0.0 of its total potential returns per unit of risk. RCL Foods Limited is currently generating about 0.12 per unit of volatility. If you would invest  46.00  in RCL Foods Limited on May 2, 2025 and sell it today you would earn a total of  11.00  from holding RCL Foods Limited or generate 23.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Founder Group Limited  vs.  RCL Foods Limited

Founder Group Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Founder Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Founder Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

RCL Foods Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RCL Foods Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, RCL Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Founder Group and RCL Foods

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

The idea behind Founder Group Limited and RCL Foods 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.