Correlation Between United Radiant and Posiflex Technology

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

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

Diversification Opportunities for United Radiant and Posiflex Technology

0.02

Correlation Coefficient

United Radiant  Posiflex Technology

Significant diversification

The 3 months correlation between United and Posiflex is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding United Radiant Technology and Posiflex Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Posiflex Technology and United Radiant 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 United Radiant Technology are associated (or correlated) with Posiflex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Posiflex Technology has no effect on the direction of United Radiant i.e., United Radiant and Posiflex Technology go up and down completely randomly.

Pair Corralation between United Radiant and Posiflex Technology

Assuming the 90 days trading horizon United Radiant Technology is expected to generate 0.79 times more return on investment than Posiflex Technology. However, United Radiant Technology is 1.26 times less risky than Posiflex Technology. It trades about -0.14 of its potential returns per unit of risk. Posiflex Technology is currently generating about -0.16 per unit of risk. If you would invest  2,075  in United Radiant Technology on October 24, 2024 and sell it today you would lose (110.00) from holding United Radiant Technology or give up 5.3% of portfolio value over 90 days.

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

United Radiant Technology  vs.  Posiflex Technology

United Radiant Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Radiant Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, United Radiant is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Posiflex Technology

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Posiflex Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Posiflex Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with United Radiant and Posiflex Technology

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

The idea behind United Radiant Technology and Posiflex Technology 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 CEOs Directory module to screen CEOs from public companies around the world.