Correlation Between Roma Green and Resources Connection

Can any of the company-specific risk be diversified away by investing in both Roma Green and Resources Connection 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 Roma Green and Resources Connection into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roma Green Finance and Resources Connection, you can compare the effects of market volatilities on Roma Green and Resources Connection 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 Roma Green with a short position of Resources Connection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roma Green and Resources Connection.

Diversification Opportunities for Roma Green and Resources Connection

-0.67

Correlation Coefficient

Roma Green  Resources Connection

Excellent diversification

The 3 months correlation between Roma and Resources is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Roma Green Finance and Resources Connection in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resources Connection and Roma Green 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 Roma Green Finance are associated (or correlated) with Resources Connection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resources Connection has no effect on the direction of Roma Green i.e., Roma Green and Resources Connection go up and down completely randomly.

Pair Corralation between Roma Green and Resources Connection

Given the investment horizon of 90 days Roma Green Finance is expected to generate 2.0 times more return on investment than Resources Connection. However, Roma Green is 2.0 times more volatile than Resources Connection. It trades about 0.15 of its potential returns per unit of risk. Resources Connection is currently generating about -0.2 per unit of risk. If you would invest  65.00  in Roma Green Finance on January 16, 2025 and sell it today you would earn a total of  39.00  from holding Roma Green Finance or generate 60.0% return on investment over 90 days.

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

Roma Green Finance  vs.  Resources Connection

Roma Green Finance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roma Green Finance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Roma Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Resources Connection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resources Connection has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in May 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Roma Green and Resources Connection

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

The idea behind Roma Green Finance and Resources Connection 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.