Correlation Between RadNet and Plum Acquisition

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

By analyzing existing cross correlation between RadNet Inc and Plum Acquisition Corp, you can compare the effects of market volatilities on RadNet and Plum Acquisition 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 RadNet with a short position of Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of RadNet and Plum Acquisition.

Diversification Opportunities for RadNet and Plum Acquisition

-0.21

Correlation Coefficient

RadNet  Plum Acquisition

Very good diversification

The 3 months correlation between RadNet and Plum is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and RadNet 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 RadNet Inc are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of RadNet i.e., RadNet and Plum Acquisition go up and down completely randomly.

Pair Corralation between RadNet and Plum Acquisition

Given the investment horizon of 90 days RadNet Inc is expected to under-perform the Plum Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, RadNet Inc is 7.29 times less risky than Plum Acquisition. The stock trades about -0.23 of its potential returns per unit of risk. The Plum Acquisition Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Plum Acquisition Corp on October 10, 2024 and sell it today you would earn a total of  2.00  from holding Plum Acquisition Corp or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.19%
Values	Daily Returns

RadNet Inc  vs.  Plum Acquisition Corp

RadNet Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Plum Acquisition Corp

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Plum Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak forward-looking indicators, Plum Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RadNet and Plum Acquisition

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

The idea behind RadNet Inc and Plum Acquisition Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.