Correlation Between Radworks and ABL

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

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

Diversification Opportunities for Radworks and ABL

-0.33

Correlation Coefficient

Radworks  ABL

Very good diversification

The 3 months correlation between Radworks and ABL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Radworks and ABL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABL and Radworks 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 Radworks are associated (or correlated) with ABL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABL has no effect on the direction of Radworks i.e., Radworks and ABL go up and down completely randomly.

Pair Corralation between Radworks and ABL

Assuming the 90 days trading horizon Radworks is expected to generate 2.06 times more return on investment than ABL. However, Radworks is 2.06 times more volatile than ABL. It trades about 0.03 of its potential returns per unit of risk. ABL is currently generating about 0.0 per unit of risk. If you would invest  205.00  in Radworks on January 30, 2024 and sell it today you would lose (27.00) from holding Radworks or give up 13.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.9%
Values	Daily Returns

Radworks  vs.  ABL

Radworks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radworks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Radworks may actually be approaching a critical reversion point that can send shares even higher in May 2024.

ABL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, ABL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Radworks and ABL

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

The idea behind Radworks and ABL 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.