Correlation Between RadNet and Telia Company

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

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

Diversification Opportunities for RadNet and Telia Company

0.82

Correlation Coefficient

RadNet  Telia Company

Very poor diversification

The 3 months correlation between RadNet and Telia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RadNet Inc and Telia Company AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telia Company 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 Telia Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telia Company has no effect on the direction of RadNet i.e., RadNet and Telia Company go up and down completely randomly.

Pair Corralation between RadNet and Telia Company

Given the investment horizon of 90 days RadNet is expected to generate 1.42 times less return on investment than Telia Company. In addition to that, RadNet is 1.17 times more volatile than Telia Company AB. It trades about 0.06 of its total potential returns per unit of risk. Telia Company AB is currently generating about 0.1 per unit of volatility. If you would invest  261.00  in Telia Company AB on October 10, 2024 and sell it today you would earn a total of  49.00  from holding Telia Company AB or generate 18.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	62.9%
Values	Daily Returns

RadNet Inc  vs.  Telia Company AB

RadNet Inc

Risk-Adjusted Performance

5 of 100

Insignificant

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.

Telia Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telia Company AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Telia Company is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with RadNet and Telia Company

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

The idea behind RadNet Inc and Telia Company AB 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.