Correlation Between Founding Construction and Radium Life

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

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

Diversification Opportunities for Founding Construction and Radium Life

-0.18

Correlation Coefficient

Founding Construction  Radium Life

Good diversification

The 3 months correlation between Founding and Radium is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Founding Construction Developm and Radium Life Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radium Life Tech and Founding Construction 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 Founding Construction Development are associated (or correlated) with Radium Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radium Life Tech has no effect on the direction of Founding Construction i.e., Founding Construction and Radium Life go up and down completely randomly.

Pair Corralation between Founding Construction and Radium Life

Assuming the 90 days trading horizon Founding Construction Development is expected to under-perform the Radium Life. But the stock apears to be less risky and, when comparing its historical volatility, Founding Construction Development is 1.39 times less risky than Radium Life. The stock trades about -0.1 of its potential returns per unit of risk. The Radium Life Tech is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,155  in Radium Life Tech on October 25, 2024 and sell it today you would lose (105.00) from holding Radium Life Tech or give up 9.09% of portfolio value over 90 days.

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

Founding Construction Developm  vs.  Radium Life Tech

Founding Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Founding Construction and Radium Life

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

The idea behind Founding Construction Development and Radium Life Tech 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.