Correlation Between Aeon Credit and Radiant Globaltech

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

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

Diversification Opportunities for Aeon Credit and Radiant Globaltech

0.02

Correlation Coefficient

Aeon Credit  Radiant Globaltech

Significant diversification

The 3 months correlation between Aeon and Radiant is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aeon Credit Service 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 Aeon Credit 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 Aeon Credit Service 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 Aeon Credit i.e., Aeon Credit and Radiant Globaltech go up and down completely randomly.

Pair Corralation between Aeon Credit and Radiant Globaltech

Assuming the 90 days trading horizon Aeon Credit Service is expected to under-perform the Radiant Globaltech. But the stock apears to be less risky and, when comparing its historical volatility, Aeon Credit Service is 1.98 times less risky than Radiant Globaltech. The stock trades about -0.14 of its potential returns per unit of risk. The Radiant Globaltech Bhd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Radiant Globaltech Bhd on September 29, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aeon Credit Service  vs.  Radiant Globaltech Bhd

Aeon Credit Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeon Credit Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains 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 Aeon Credit and Radiant Globaltech

The main advantage of trading using opposite Aeon Credit and Radiant Globaltech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aeon Credit 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 Aeon Credit Service 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.