Correlation Between Radiant Globaltech and PESTECH International

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

Diversification Opportunities for Radiant Globaltech and PESTECH International

0.58

Correlation Coefficient

Radiant Globaltech  PESTECH International

Very weak diversification

The 3 months correlation between Radiant and PESTECH is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Globaltech Bhd and PESTECH International Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PESTECH International Bhd 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 PESTECH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PESTECH International Bhd has no effect on the direction of Radiant Globaltech i.e., Radiant Globaltech and PESTECH International go up and down completely randomly.

Pair Corralation between Radiant Globaltech and PESTECH International

Assuming the 90 days trading horizon Radiant Globaltech is expected to generate 7.38 times less return on investment than PESTECH International. But when comparing it to its historical volatility, Radiant Globaltech Bhd is 2.3 times less risky than PESTECH International. It trades about 0.03 of its potential returns per unit of risk. PESTECH International Bhd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  14.00  in PESTECH International Bhd on October 26, 2024 and sell it today you would earn a total of  4.00  from holding PESTECH International Bhd or generate 28.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Radiant Globaltech Bhd  vs.  PESTECH International Bhd

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 current stock price mess, may contribute to short-term losses for the institutional investors.

PESTECH International Bhd

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PESTECH International Bhd are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, PESTECH International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radiant Globaltech and PESTECH International

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

The idea behind Radiant Globaltech Bhd and PESTECH International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..