Correlation Between Smart Sand and RPC

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

By analyzing existing cross correlation between Smart Sand and RPC Inc, you can compare the effects of market volatilities on Smart Sand and RPC 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 Smart Sand with a short position of RPC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Sand and RPC.

Diversification Opportunities for Smart Sand and RPC

-0.61

Correlation Coefficient

Smart Sand  RPC

Excellent diversification

The 3 months correlation between Smart and RPC is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Smart Sand and RPC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RPC Inc and Smart Sand 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 Smart Sand are associated (or correlated) with RPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RPC Inc has no effect on the direction of Smart Sand i.e., Smart Sand and RPC go up and down completely randomly.

Pair Corralation between Smart Sand and RPC

Considering the 90-day investment horizon Smart Sand is expected to under-perform the RPC. In addition to that, Smart Sand is 1.26 times more volatile than RPC Inc. It trades about -0.19 of its total potential returns per unit of risk. RPC Inc is currently generating about -0.08 per unit of volatility. If you would invest  675.00  in RPC Inc on March 9, 2024 and sell it today you would lose (27.00) from holding RPC Inc or give up 4.0% of portfolio value over 90 days.

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

Smart Sand  vs.  RPC Inc

Smart Sand

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Sand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Smart Sand is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

RPC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RPC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Smart Sand and RPC

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

The idea behind Smart Sand and RPC Inc 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.