Correlation Between Radiant Globaltech and Binasat Communications

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

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

Diversification Opportunities for Radiant Globaltech and Binasat Communications

0.06

Correlation Coefficient

Radiant Globaltech  Binasat Communications

Significant diversification

The 3 months correlation between Radiant and Binasat is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Globaltech Bhd and Binasat Communications Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binasat Communications and Radiant Globaltech 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 Globaltech Bhd are associated (or correlated) with Binasat Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binasat Communications has no effect on the direction of Radiant Globaltech i.e., Radiant Globaltech and Binasat Communications go up and down completely randomly.

Pair Corralation between Radiant Globaltech and Binasat Communications

Assuming the 90 days trading horizon Radiant Globaltech Bhd is expected to generate 0.95 times more return on investment than Binasat Communications. However, Radiant Globaltech Bhd is 1.05 times less risky than Binasat Communications. It trades about -0.06 of its potential returns per unit of risk. Binasat Communications Bhd is currently generating about -0.21 per unit of risk. If you would invest  35.00  in Radiant Globaltech Bhd on September 22, 2024 and sell it today you would lose (1.00) from holding Radiant Globaltech Bhd or give up 2.86% of portfolio value over 90 days.

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

Radiant Globaltech Bhd  vs.  Binasat Communications Bhd

Radiant Globaltech Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Globaltech Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Binasat Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Binasat Communications Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Radiant Globaltech and Binasat Communications

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

The idea behind Radiant Globaltech Bhd and Binasat Communications 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.