Correlation Between Radiant Cash and Iris Clothings

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

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

Diversification Opportunities for Radiant Cash and Iris Clothings

0.75

Correlation Coefficient

Radiant Cash  Iris Clothings

Poor diversification

The 3 months correlation between Radiant and Iris is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Cash Management and Iris Clothings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Clothings and Radiant Cash 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 Radiant Cash Management are associated (or correlated) with Iris Clothings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Clothings has no effect on the direction of Radiant Cash i.e., Radiant Cash and Iris Clothings go up and down completely randomly.

Pair Corralation between Radiant Cash and Iris Clothings

Assuming the 90 days trading horizon Radiant Cash Management is expected to under-perform the Iris Clothings. But the stock apears to be less risky and, when comparing its historical volatility, Radiant Cash Management is 13.62 times less risky than Iris Clothings. The stock trades about -0.02 of its potential returns per unit of risk. The Iris Clothings Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,005  in Iris Clothings Limited on September 25, 2024 and sell it today you would earn a total of  1,237  from holding Iris Clothings Limited or generate 24.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Radiant Cash Management  vs.  Iris Clothings Limited

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.

Iris Clothings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iris Clothings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Radiant Cash and Iris Clothings

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

The idea behind Radiant Cash Management and Iris Clothings Limited 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.