Correlation Between ECM Libra and Radiant Globaltech

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

By analyzing existing cross correlation between ECM Libra Financial and Radiant Globaltech Bhd, you can compare the effects of market volatilities on ECM Libra and Radiant Globaltech 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 ECM Libra with a short position of Radiant Globaltech. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECM Libra and Radiant Globaltech.

Diversification Opportunities for ECM Libra and Radiant Globaltech

0.28

Correlation Coefficient

ECM Libra  Radiant Globaltech

Modest diversification

The 3 months correlation between ECM and Radiant is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ECM Libra Financial and Radiant Globaltech Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Globaltech Bhd and ECM Libra 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 ECM Libra Financial are associated (or correlated) with Radiant Globaltech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Globaltech Bhd has no effect on the direction of ECM Libra i.e., ECM Libra and Radiant Globaltech go up and down completely randomly.

Pair Corralation between ECM Libra and Radiant Globaltech

Assuming the 90 days trading horizon ECM Libra Financial is expected to under-perform the Radiant Globaltech. In addition to that, ECM Libra is 1.79 times more volatile than Radiant Globaltech Bhd. It trades about -0.06 of its total potential returns per unit of risk. Radiant Globaltech Bhd is currently generating about 0.08 per unit of volatility. If you would invest  34.00  in Radiant Globaltech Bhd on September 27, 2024 and sell it today you would earn a total of  1.00  from holding Radiant Globaltech Bhd or generate 2.94% return on investment over 90 days.

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

ECM Libra Financial  vs.  Radiant Globaltech Bhd

ECM Libra Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ECM Libra Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Radiant Globaltech Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radiant Globaltech Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Radiant Globaltech is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ECM Libra and Radiant Globaltech

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

The idea behind ECM Libra Financial and Radiant Globaltech Bhd 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.