Correlation Between Radiant Cash and FSN E

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

By analyzing existing cross correlation between Radiant Cash Management and FSN E Commerce Ventures, you can compare the effects of market volatilities on Radiant Cash and FSN E 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 Radiant Cash with a short position of FSN E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Cash and FSN E.

Diversification Opportunities for Radiant Cash and FSN E

0.79

Correlation Coefficient

Radiant Cash  FSN E

Poor diversification

The 3 months correlation between Radiant and FSN is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Cash Management and FSN E Commerce Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSN E Commerce and Radiant Cash 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 Radiant Cash Management are associated (or correlated) with FSN E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSN E Commerce has no effect on the direction of Radiant Cash i.e., Radiant Cash and FSN E go up and down completely randomly.

Pair Corralation between Radiant Cash and FSN E

Assuming the 90 days trading horizon Radiant Cash Management is expected to generate 1.02 times more return on investment than FSN E. However, Radiant Cash is 1.02 times more volatile than FSN E Commerce Ventures. It trades about -0.03 of its potential returns per unit of risk. FSN E Commerce Ventures is currently generating about -0.23 per unit of risk. If you would invest  7,986  in Radiant Cash Management on September 5, 2024 and sell it today you would lose (313.00) from holding Radiant Cash Management or give up 3.92% of portfolio value over 90 days.

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

Radiant Cash Management  vs.  FSN E Commerce Ventures

Radiant Cash Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Cash Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Radiant Cash is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

FSN E Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FSN E Commerce Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Radiant Cash and FSN E

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

The idea behind Radiant Cash Management and FSN E Commerce Ventures 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.