Correlation Between Signal Advance and Rain Enhancement

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

By analyzing existing cross correlation between Signal Advance and Rain Enhancement Technologies, you can compare the effects of market volatilities on Signal Advance and Rain Enhancement 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 Signal Advance with a short position of Rain Enhancement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Signal Advance and Rain Enhancement.

Diversification Opportunities for Signal Advance and Rain Enhancement

-0.41

Correlation Coefficient

Signal Advance  Rain Enhancement

Very good diversification

The 3 months correlation between Signal and Rain is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Signal Advance and Rain Enhancement Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rain Enhancement Tec and Signal Advance 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 Signal Advance are associated (or correlated) with Rain Enhancement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rain Enhancement Tec has no effect on the direction of Signal Advance i.e., Signal Advance and Rain Enhancement go up and down completely randomly.

Pair Corralation between Signal Advance and Rain Enhancement

Given the investment horizon of 90 days Signal Advance is expected to generate 1.1 times more return on investment than Rain Enhancement. However, Signal Advance is 1.1 times more volatile than Rain Enhancement Technologies. It trades about 0.23 of its potential returns per unit of risk. Rain Enhancement Technologies is currently generating about -0.15 per unit of risk. If you would invest  7.20  in Signal Advance on December 19, 2024 and sell it today you would earn a total of  19.80  from holding Signal Advance or generate 275.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	88.14%
Values	Daily Returns

Signal Advance  vs.  Rain Enhancement Technologies

Signal Advance

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Signal Advance are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Signal Advance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rain Enhancement Tec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rain Enhancement Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Signal Advance and Rain Enhancement

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

The idea behind Signal Advance and Rain Enhancement Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.