Correlation Between Radiant Cash and ITI

Can any of the company-specific risk be diversified away by investing in both Radiant Cash and ITI 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 ITI 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 ITI Limited, you can compare the effects of market volatilities on Radiant Cash and ITI 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 ITI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Cash and ITI.

Diversification Opportunities for Radiant Cash and ITI

-0.27

Correlation Coefficient

Radiant Cash  ITI

Very good diversification

The 3 months correlation between Radiant and ITI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Cash Management and ITI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITI Limited 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 ITI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITI Limited has no effect on the direction of Radiant Cash i.e., Radiant Cash and ITI go up and down completely randomly.

Pair Corralation between Radiant Cash and ITI

Assuming the 90 days trading horizon Radiant Cash Management is expected to under-perform the ITI. But the stock apears to be less risky and, when comparing its historical volatility, Radiant Cash Management is 3.71 times less risky than ITI. The stock trades about -0.04 of its potential returns per unit of risk. The ITI Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  23,450  in ITI Limited on October 6, 2024 and sell it today you would earn a total of  22,260  from holding ITI Limited or generate 94.93% return on investment over 90 days.

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

Radiant Cash Management  vs.  ITI 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

ITI Limited

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ITI Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, ITI exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radiant Cash and ITI

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

The idea behind Radiant Cash Management and ITI 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.