Correlation Between KRISPY KREME and RADIANCE HLDGS

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

By analyzing existing cross correlation between KRISPY KREME DL 01 and RADIANCE HLDGS GRPHD 01, you can compare the effects of market volatilities on KRISPY KREME and RADIANCE HLDGS 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 KRISPY KREME with a short position of RADIANCE HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and RADIANCE HLDGS.

Diversification Opportunities for KRISPY KREME and RADIANCE HLDGS

0.02

Correlation Coefficient

KRISPY KREME  RADIANCE HLDGS

Significant diversification

The 3 months correlation between KRISPY and RADIANCE is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and RADIANCE HLDGS GRPHD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RADIANCE HLDGS GRPHD and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with RADIANCE HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RADIANCE HLDGS GRPHD has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between KRISPY KREME and RADIANCE HLDGS

Assuming the 90 days horizon KRISPY KREME is expected to generate 6.83 times less return on investment than RADIANCE HLDGS. But when comparing it to its historical volatility, KRISPY KREME DL 01 is 2.17 times less risky than RADIANCE HLDGS. It trades about 0.0 of its potential returns per unit of risk. RADIANCE HLDGS GRPHD 01 is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  49.00  in RADIANCE HLDGS GRPHD 01 on October 13, 2024 and sell it today you would lose (17.00) from holding RADIANCE HLDGS GRPHD 01 or give up 34.69% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  RADIANCE HLDGS GRPHD 01

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RADIANCE HLDGS GRPHD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with KRISPY KREME and RADIANCE HLDGS

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

The idea behind KRISPY KREME DL 01 and RADIANCE HLDGS GRPHD 01 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.