Correlation Between Radium Life and Huaku Development

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

By analyzing existing cross correlation between Radium Life Tech and Huaku Development Co, you can compare the effects of market volatilities on Radium Life and Huaku Development 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 Radium Life with a short position of Huaku Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radium Life and Huaku Development.

Diversification Opportunities for Radium Life and Huaku Development

-0.23

Correlation Coefficient

Radium Life  Huaku Development

Very good diversification

The 3 months correlation between Radium and Huaku is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Radium Life Tech and Huaku Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaku Development and Radium Life 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 Radium Life Tech are associated (or correlated) with Huaku Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaku Development has no effect on the direction of Radium Life i.e., Radium Life and Huaku Development go up and down completely randomly.

Pair Corralation between Radium Life and Huaku Development

Assuming the 90 days trading horizon Radium Life Tech is expected to under-perform the Huaku Development. But the stock apears to be less risky and, when comparing its historical volatility, Radium Life Tech is 1.11 times less risky than Huaku Development. The stock trades about -0.08 of its potential returns per unit of risk. The Huaku Development Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,950  in Huaku Development Co on October 10, 2024 and sell it today you would lose (400.00) from holding Huaku Development Co or give up 3.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Radium Life Tech  vs.  Huaku Development Co

Radium Life Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radium Life Tech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Radium Life may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Huaku Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaku Development Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Radium Life and Huaku Development

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

The idea behind Radium Life Tech and Huaku Development 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.