Correlation Between Radiant Cash and Hi Tech

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Can any of the company-specific risk be diversified away by investing in both Radiant Cash and Hi Tech 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 Radiant Cash and Hi Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radiant Cash Management and The Hi Tech Gears, you can compare the effects of market volatilities on Radiant Cash and Hi Tech 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 Radiant Cash with a short position of Hi Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Cash and Hi Tech.

Diversification Opportunities for Radiant Cash and Hi Tech

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Radiant and HITECHGEAR is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Cash Management and The Hi Tech Gears in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Tech and Radiant Cash 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 Radiant Cash Management are associated (or correlated) with Hi Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Tech has no effect on the direction of Radiant Cash i.e., Radiant Cash and Hi Tech go up and down completely randomly.

Pair Corralation between Radiant Cash and Hi Tech

Assuming the 90 days trading horizon Radiant Cash is expected to generate 2.45 times less return on investment than Hi Tech. But when comparing it to its historical volatility, Radiant Cash Management is 2.36 times less risky than Hi Tech. It trades about 0.12 of its potential returns per unit of risk. The Hi Tech Gears is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  74,515  in The Hi Tech Gears on August 29, 2024 and sell it today you would earn a total of  5,620  from holding The Hi Tech Gears or generate 7.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Radiant Cash Management  vs.  The Hi Tech Gears

 Performance 
       Timeline  
Radiant Cash Management 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Radiant Cash Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Hi Tech 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Hi Tech Gears has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Radiant Cash and Hi Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Radiant Cash and Hi Tech

The main advantage of trading using opposite Radiant Cash and Hi Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Cash position performs unexpectedly, Hi Tech 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 Hi Tech will offset losses from the drop in Hi Tech's long position.
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The idea behind Radiant Cash Management and The Hi Tech Gears 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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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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