Correlation Between Rbc China and Growth Equity

Can any of the company-specific risk be diversified away by investing in both Rbc China and Growth Equity 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 Rbc China and Growth Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rbc China Equity and The Growth Equity, you can compare the effects of market volatilities on Rbc China and Growth Equity 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 Rbc China with a short position of Growth Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rbc China and Growth Equity.

Diversification Opportunities for Rbc China and Growth Equity

0.88

Correlation Coefficient

Rbc China  Growth Equity

Very poor diversification

The 3 months correlation between Rbc and Growth is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Rbc China Equity and The Growth Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Equity and Rbc China 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 Rbc China Equity are associated (or correlated) with Growth Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Equity has no effect on the direction of Rbc China i.e., Rbc China and Growth Equity go up and down completely randomly.

Pair Corralation between Rbc China and Growth Equity

Assuming the 90 days horizon Rbc China is expected to generate 1.46 times less return on investment than Growth Equity. In addition to that, Rbc China is 1.47 times more volatile than The Growth Equity. It trades about 0.12 of its total potential returns per unit of risk. The Growth Equity is currently generating about 0.26 per unit of volatility. If you would invest  3,690  in The Growth Equity on May 5, 2025 and sell it today you would earn a total of  435.00  from holding The Growth Equity or generate 11.79% return on investment over 90 days.

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

Rbc China Equity  vs.  The Growth Equity

Rbc China Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc China Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Rbc China may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Growth Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Growth Equity are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Growth Equity may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Rbc China and Growth Equity

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

The idea behind Rbc China Equity and The Growth Equity 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.