Correlation Between Radium Life and Huang Hsiang

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

By analyzing existing cross correlation between Radium Life Tech and Huang Hsiang Construction, you can compare the effects of market volatilities on Radium Life and Huang Hsiang 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 Radium Life with a short position of Huang Hsiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radium Life and Huang Hsiang.

Diversification Opportunities for Radium Life and Huang Hsiang

0.27

Correlation Coefficient

Radium Life  Huang Hsiang

Modest diversification

The 3 months correlation between Radium and Huang is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Radium Life Tech and Huang Hsiang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huang Hsiang Construction and Radium Life 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 Radium Life Tech are associated (or correlated) with Huang Hsiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huang Hsiang Construction has no effect on the direction of Radium Life i.e., Radium Life and Huang Hsiang go up and down completely randomly.

Pair Corralation between Radium Life and Huang Hsiang

Assuming the 90 days trading horizon Radium Life is expected to generate 138.28 times less return on investment than Huang Hsiang. But when comparing it to its historical volatility, Radium Life Tech is 1.39 times less risky than Huang Hsiang. It trades about 0.0 of its potential returns per unit of risk. Huang Hsiang Construction is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,030  in Huang Hsiang Construction on September 3, 2024 and sell it today you would earn a total of  1,560  from holding Huang Hsiang Construction or generate 25.87% return on investment over 90 days.

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

Radium Life Tech  vs.  Huang Hsiang Construction

Radium Life Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radium Life Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Radium Life is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Huang Hsiang Construction

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huang Hsiang Construction are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Huang Hsiang showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radium Life and Huang Hsiang

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

The idea behind Radium Life Tech and Huang Hsiang Construction 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.