Correlation Between Radio Fuels and Isoenergy

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

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

Diversification Opportunities for Radio Fuels and Isoenergy

-0.3

Correlation Coefficient

Radio Fuels  Isoenergy

Very good diversification

The 3 months correlation between Radio and Isoenergy is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Radio Fuels Energy and Isoenergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isoenergy and Radio Fuels 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 Radio Fuels Energy are associated (or correlated) with Isoenergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isoenergy has no effect on the direction of Radio Fuels i.e., Radio Fuels and Isoenergy go up and down completely randomly.

Pair Corralation between Radio Fuels and Isoenergy

Assuming the 90 days horizon Radio Fuels Energy is expected to under-perform the Isoenergy. In addition to that, Radio Fuels is 2.21 times more volatile than Isoenergy. It trades about -0.09 of its total potential returns per unit of risk. Isoenergy is currently generating about -0.08 per unit of volatility. If you would invest  259.00  in Isoenergy on August 29, 2024 and sell it today you would lose (19.00) from holding Isoenergy or give up 7.34% of portfolio value over 90 days.

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

Radio Fuels Energy  vs.  Isoenergy

Radio Fuels Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radio Fuels Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Isoenergy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Isoenergy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Isoenergy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Radio Fuels and Isoenergy

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

The idea behind Radio Fuels Energy and Isoenergy 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.