Correlation Between RETAIL FOOD and RADIANCE HLDGS

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

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

Diversification Opportunities for RETAIL FOOD and RADIANCE HLDGS

0.06

Correlation Coefficient

RETAIL FOOD  RADIANCE HLDGS

Significant diversification

The 3 months correlation between RETAIL and RADIANCE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP 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 RETAIL FOOD 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 RETAIL FOOD GROUP 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 RETAIL FOOD i.e., RETAIL FOOD and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between RETAIL FOOD and RADIANCE HLDGS

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to under-perform the RADIANCE HLDGS. But the stock apears to be less risky and, when comparing its historical volatility, RETAIL FOOD GROUP is 3.64 times less risky than RADIANCE HLDGS. The stock trades about -0.05 of its potential returns per unit of risk. The RADIANCE HLDGS GRPHD 01 is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  31.00  in RADIANCE HLDGS GRPHD 01 on September 24, 2024 and sell it today you would earn a total of  6.00  from holding RADIANCE HLDGS GRPHD 01 or generate 19.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

RETAIL FOOD GROUP  vs.  RADIANCE HLDGS GRPHD 01

RETAIL FOOD GROUP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RETAIL FOOD GROUP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, RETAIL FOOD is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RADIANCE HLDGS GRPHD 01 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, RADIANCE HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RETAIL FOOD and RADIANCE HLDGS

The main advantage of trading using opposite RETAIL FOOD and RADIANCE HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD 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 RETAIL FOOD GROUP 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.