Correlation Between Nahar Industrial and Radiant Cash

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

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

Diversification Opportunities for Nahar Industrial and Radiant Cash

0.44

Correlation Coefficient

Nahar Industrial  Radiant Cash

Very weak diversification

The 3 months correlation between Nahar and Radiant is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises and Radiant Cash Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Cash Management and Nahar Industrial 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 Nahar Industrial Enterprises are associated (or correlated) with Radiant Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Cash Management has no effect on the direction of Nahar Industrial i.e., Nahar Industrial and Radiant Cash go up and down completely randomly.

Pair Corralation between Nahar Industrial and Radiant Cash

Assuming the 90 days trading horizon Nahar Industrial Enterprises is expected to under-perform the Radiant Cash. In addition to that, Nahar Industrial is 1.37 times more volatile than Radiant Cash Management. It trades about -0.11 of its total potential returns per unit of risk. Radiant Cash Management is currently generating about -0.07 per unit of volatility. If you would invest  7,673  in Radiant Cash Management on October 4, 2024 and sell it today you would lose (171.00) from holding Radiant Cash Management or give up 2.23% of portfolio value over 90 days.

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

Nahar Industrial Enterprises  vs.  Radiant Cash Management

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nahar Industrial Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Nahar Industrial is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Radiant Cash Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Cash Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Radiant Cash is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nahar Industrial and Radiant Cash

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

The idea behind Nahar Industrial Enterprises and Radiant Cash Management 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.