Correlation Between Radiant Globaltech and Cloudpoint Technology

Can any of the company-specific risk be diversified away by investing in both Radiant Globaltech and Cloudpoint Technology 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 Cloudpoint Technology 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 Cloudpoint Technology Berhad, you can compare the effects of market volatilities on Radiant Globaltech and Cloudpoint Technology 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 Cloudpoint Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Globaltech and Cloudpoint Technology.

Diversification Opportunities for Radiant Globaltech and Cloudpoint Technology

0.26

Correlation Coefficient

Radiant Globaltech  Cloudpoint Technology

Modest diversification

The 3 months correlation between Radiant and Cloudpoint is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Globaltech Bhd and Cloudpoint Technology Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cloudpoint Technology 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 Cloudpoint Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cloudpoint Technology has no effect on the direction of Radiant Globaltech i.e., Radiant Globaltech and Cloudpoint Technology go up and down completely randomly.

Pair Corralation between Radiant Globaltech and Cloudpoint Technology

Assuming the 90 days trading horizon Radiant Globaltech is expected to generate 1.1 times less return on investment than Cloudpoint Technology. But when comparing it to its historical volatility, Radiant Globaltech Bhd is 1.27 times less risky than Cloudpoint Technology. It trades about 0.08 of its potential returns per unit of risk. Cloudpoint Technology Berhad is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Cloudpoint Technology Berhad on October 9, 2024 and sell it today you would earn a total of  8.00  from holding Cloudpoint Technology Berhad or generate 9.41% return on investment over 90 days.

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

Radiant Globaltech Bhd  vs.  Cloudpoint Technology Berhad

Radiant Globaltech Bhd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radiant Globaltech Bhd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Radiant Globaltech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Cloudpoint Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudpoint Technology Berhad are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cloudpoint Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Radiant Globaltech and Cloudpoint Technology

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

The idea behind Radiant Globaltech Bhd and Cloudpoint Technology Berhad 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.