Correlation Between Ardentec and Radiant Opto
Can any of the company-specific risk be diversified away by investing in both Ardentec and Radiant Opto 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 Ardentec and Radiant Opto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ardentec and Radiant Opto Electronics Corp, you can compare the effects of market volatilities on Ardentec and Radiant Opto 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 Ardentec with a short position of Radiant Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ardentec and Radiant Opto.
Diversification Opportunities for Ardentec and Radiant Opto
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ardentec and Radiant is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ardentec and Radiant Opto Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Opto Electro and Ardentec 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 Ardentec are associated (or correlated) with Radiant Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Opto Electro has no effect on the direction of Ardentec i.e., Ardentec and Radiant Opto go up and down completely randomly.
Pair Corralation between Ardentec and Radiant Opto
Assuming the 90 days trading horizon Ardentec is expected to generate 2.9 times less return on investment than Radiant Opto. But when comparing it to its historical volatility, Ardentec is 1.09 times less risky than Radiant Opto. It trades about 0.03 of its potential returns per unit of risk. Radiant Opto Electronics Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 10,350 in Radiant Opto Electronics Corp on September 3, 2024 and sell it today you would earn a total of 8,700 from holding Radiant Opto Electronics Corp or generate 84.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ardentec vs. Radiant Opto Electronics Corp
Performance |
| Timeline |
| Ardentec |
| Radiant Opto Electro |
Ardentec and Radiant Opto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ardentec and Radiant Opto
The main advantage of trading using opposite Ardentec and Radiant Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ardentec position performs unexpectedly, Radiant Opto 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 Radiant Opto will offset losses from the drop in Radiant Opto's long position.| Ardentec vs. Chung Hsin Electric Machinery | Ardentec vs. China Construction Bank | Ardentec vs. Est Global Apparel | Ardentec vs. Emerging Display Technologies |
| Radiant Opto vs. Taiwan Semiconductor Manufacturing | Radiant Opto vs. Yang Ming Marine | Radiant Opto vs. ASE Industrial Holding | Radiant Opto vs. AU Optronics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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