Correlation Between RadNet and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both RadNet and Algoma Steel 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 RadNet and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RadNet Inc and Algoma Steel Group, you can compare the effects of market volatilities on RadNet and Algoma Steel 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 RadNet with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Algoma Steel.
Diversification Opportunities for RadNet and Algoma Steel
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between RadNet and Algoma is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and RadNet 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 RadNet Inc are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of RadNet i.e., RadNet and Algoma Steel go up and down completely randomly.
Pair Corralation between RadNet and Algoma Steel
Given the investment horizon of 90 days RadNet Inc is expected to generate 1.03 times more return on investment than Algoma Steel. However, RadNet is 1.03 times more volatile than Algoma Steel Group. It trades about -0.22 of its potential returns per unit of risk. Algoma Steel Group is currently generating about -0.26 per unit of risk. If you would invest 7,102 in RadNet Inc on November 30, 2024 and sell it today you would lose (1,555) from holding RadNet Inc or give up 21.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RadNet Inc vs. Algoma Steel Group
Performance |
| Timeline |
| RadNet Inc |
| Algoma Steel Group |
RadNet and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RadNet and Algoma Steel
The main advantage of trading using opposite RadNet and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RadNet position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.| RadNet vs. Sotera Health Co | RadNet vs. Neogen | RadNet vs. Myriad Genetics | RadNet vs. bioAffinity Technologies Warrant |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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