Correlation Between Adaptive Plasma and RedcapTour

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

By analyzing existing cross correlation between Adaptive Plasma Technology and RedcapTour Co, you can compare the effects of market volatilities on Adaptive Plasma and RedcapTour 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 Adaptive Plasma with a short position of RedcapTour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaptive Plasma and RedcapTour.

Diversification Opportunities for Adaptive Plasma and RedcapTour

-0.89

Correlation Coefficient

Adaptive Plasma  RedcapTour

Pay attention - limited upside

The 3 months correlation between Adaptive and RedcapTour is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Adaptive Plasma Technology and RedcapTour Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RedcapTour and Adaptive Plasma 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 Adaptive Plasma Technology are associated (or correlated) with RedcapTour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RedcapTour has no effect on the direction of Adaptive Plasma i.e., Adaptive Plasma and RedcapTour go up and down completely randomly.

Pair Corralation between Adaptive Plasma and RedcapTour

Assuming the 90 days trading horizon Adaptive Plasma Technology is expected to under-perform the RedcapTour. In addition to that, Adaptive Plasma is 2.18 times more volatile than RedcapTour Co. It trades about -0.03 of its total potential returns per unit of risk. RedcapTour Co is currently generating about 0.11 per unit of volatility. If you would invest  778,000  in RedcapTour Co on October 23, 2024 and sell it today you would earn a total of  92,000  from holding RedcapTour Co or generate 11.83% return on investment over 90 days.

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

Adaptive Plasma Technology  vs.  RedcapTour Co

Adaptive Plasma Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adaptive Plasma Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

RedcapTour

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RedcapTour Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RedcapTour may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Adaptive Plasma and RedcapTour

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

The idea behind Adaptive Plasma Technology and RedcapTour Co 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.