Correlation Between Radaan Mediaworks and Centum Electronics

Can any of the company-specific risk be diversified away by investing in both Radaan Mediaworks and Centum Electronics 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 Radaan Mediaworks and Centum Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Radaan Mediaworks India and Centum Electronics Limited, you can compare the effects of market volatilities on Radaan Mediaworks and Centum Electronics 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 Radaan Mediaworks with a short position of Centum Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radaan Mediaworks and Centum Electronics.

Diversification Opportunities for Radaan Mediaworks and Centum Electronics

0.46

Correlation Coefficient

Radaan Mediaworks  Centum Electronics

Very weak diversification

The 3 months correlation between Radaan and Centum is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Radaan Mediaworks India and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and Radaan Mediaworks 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 Radaan Mediaworks India are associated (or correlated) with Centum Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centum Electronics has no effect on the direction of Radaan Mediaworks i.e., Radaan Mediaworks and Centum Electronics go up and down completely randomly.

Pair Corralation between Radaan Mediaworks and Centum Electronics

Assuming the 90 days trading horizon Radaan Mediaworks India is expected to generate 0.58 times more return on investment than Centum Electronics. However, Radaan Mediaworks India is 1.73 times less risky than Centum Electronics. It trades about 0.44 of its potential returns per unit of risk. Centum Electronics Limited is currently generating about 0.08 per unit of risk. If you would invest  373.00  in Radaan Mediaworks India on September 29, 2024 and sell it today you would earn a total of  355.00  from holding Radaan Mediaworks India or generate 95.17% return on investment over 90 days.

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

Radaan Mediaworks India  vs.  Centum Electronics Limited

Radaan Mediaworks India

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Radaan Mediaworks India are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Radaan Mediaworks sustained solid returns over the last few months and may actually be approaching a breakup point.

Centum Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centum Electronics Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Centum Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radaan Mediaworks and Centum Electronics

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

The idea behind Radaan Mediaworks India and Centum Electronics Limited 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.