Correlation Between Radiant Cash and Suzlon Energy

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

Diversification Opportunities for Radiant Cash and Suzlon Energy

0.56

Correlation Coefficient

Radiant Cash  Suzlon Energy

Very weak diversification

The 3 months correlation between Radiant and Suzlon is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Cash Management and Suzlon Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzlon Energy 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 Suzlon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzlon Energy Limited has no effect on the direction of Radiant Cash i.e., Radiant Cash and Suzlon Energy go up and down completely randomly.

Pair Corralation between Radiant Cash and Suzlon Energy

Assuming the 90 days trading horizon Radiant Cash Management is expected to under-perform the Suzlon Energy. But the stock apears to be less risky and, when comparing its historical volatility, Radiant Cash Management is 1.6 times less risky than Suzlon Energy. The stock trades about -0.28 of its potential returns per unit of risk. The Suzlon Energy Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,325  in Suzlon Energy Limited on December 27, 2024 and sell it today you would lose (582.00) from holding Suzlon Energy Limited or give up 9.2% of portfolio value over 90 days.

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

Radiant Cash Management  vs.  Suzlon Energy Limited

Radiant Cash Management

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Suzlon Energy Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suzlon Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Radiant Cash and Suzlon Energy

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

The idea behind Radiant Cash Management and Suzlon Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.