Correlation Between RadNet and Precipio

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

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

Diversification Opportunities for RadNet and Precipio

-0.72

Correlation Coefficient

RadNet  Precipio

Pay attention - limited upside

The 3 months correlation between RadNet and Precipio is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Precipio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipio 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 Precipio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipio has no effect on the direction of RadNet i.e., RadNet and Precipio go up and down completely randomly.

Pair Corralation between RadNet and Precipio

Given the investment horizon of 90 days RadNet Inc is expected to generate 1.23 times more return on investment than Precipio. However, RadNet is 1.23 times more volatile than Precipio. It trades about 0.09 of its potential returns per unit of risk. Precipio is currently generating about -0.03 per unit of risk. If you would invest  6,681  in RadNet Inc on September 17, 2024 and sell it today you would earn a total of  1,104  from holding RadNet Inc or generate 16.52% return on investment over 90 days.

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

RadNet Inc  vs.  Precipio

RadNet Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, RadNet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Precipio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with RadNet and Precipio

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

The idea behind RadNet Inc and Precipio 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.