Correlation Between RCM Technologies and Steel Partners

Can any of the company-specific risk be diversified away by investing in both RCM Technologies and Steel Partners 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 RCM Technologies and Steel Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between RCM Technologies and Steel Partners Holdings, you can compare the effects of market volatilities on RCM Technologies and Steel Partners 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 RCM Technologies with a short position of Steel Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM Technologies and Steel Partners.

Diversification Opportunities for RCM Technologies and Steel Partners

-0.59

Correlation Coefficient

RCM Technologies  Steel Partners

Excellent diversification

The 3 months correlation between RCM and Steel is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding RCM Technologies and Steel Partners Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Partners Holdings and RCM Technologies 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 RCM Technologies are associated (or correlated) with Steel Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Partners Holdings has no effect on the direction of RCM Technologies i.e., RCM Technologies and Steel Partners go up and down completely randomly.

Pair Corralation between RCM Technologies and Steel Partners

Given the investment horizon of 90 days RCM Technologies is expected to generate 1.67 times less return on investment than Steel Partners. In addition to that, RCM Technologies is 2.24 times more volatile than Steel Partners Holdings. It trades about 0.21 of its total potential returns per unit of risk. Steel Partners Holdings is currently generating about 0.79 per unit of volatility. If you would invest  3,550  in Steel Partners Holdings on May 1, 2025 and sell it today you would earn a total of  150.00  from holding Steel Partners Holdings or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	6.45%
Values	Daily Returns

RCM Technologies  vs.  Steel Partners Holdings

RCM Technologies

Risk-Adjusted Performance

Solid

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

Steel Partners Holdings

Risk-Adjusted Performance

Market Crasher

Over the last 90 days Steel Partners Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak essential indicators, Steel Partners reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RCM Technologies and Steel Partners

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

The idea behind RCM Technologies and Steel Partners Holdings 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.