Correlation Between CTP NV and RADIANCE HLDGS

Can any of the company-specific risk be diversified away by investing in both CTP NV and RADIANCE HLDGS 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 CTP NV and RADIANCE HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTP NV EO and RADIANCE HLDGS GRPHD 01, you can compare the effects of market volatilities on CTP NV and RADIANCE HLDGS 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 CTP NV with a short position of RADIANCE HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTP NV and RADIANCE HLDGS.

Diversification Opportunities for CTP NV and RADIANCE HLDGS

0.1

Correlation Coefficient

CTP NV  RADIANCE HLDGS

Average diversification

The 3 months correlation between CTP and RADIANCE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV EO and RADIANCE HLDGS GRPHD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RADIANCE HLDGS GRPHD and CTP NV 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 CTP NV EO are associated (or correlated) with RADIANCE HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RADIANCE HLDGS GRPHD has no effect on the direction of CTP NV i.e., CTP NV and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between CTP NV and RADIANCE HLDGS

Assuming the 90 days horizon CTP NV EO is expected to under-perform the RADIANCE HLDGS. But the stock apears to be less risky and, when comparing its historical volatility, CTP NV EO is 7.09 times less risky than RADIANCE HLDGS. The stock trades about -0.1 of its potential returns per unit of risk. The RADIANCE HLDGS GRPHD 01 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  28.00  in RADIANCE HLDGS GRPHD 01 on September 23, 2024 and sell it today you would earn a total of  7.00  from holding RADIANCE HLDGS GRPHD 01 or generate 25.0% return on investment over 90 days.

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

CTP NV EO  vs.  RADIANCE HLDGS GRPHD 01

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTP NV EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RADIANCE HLDGS GRPHD 01 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, RADIANCE HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTP NV and RADIANCE HLDGS

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

The idea behind CTP NV EO and RADIANCE HLDGS GRPHD 01 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .