Correlation Between WuXi Biologics and Radcom
Can any of the company-specific risk be diversified away by investing in both WuXi Biologics and Radcom 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 WuXi Biologics and Radcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WuXi Biologics and Radcom, you can compare the effects of market volatilities on WuXi Biologics and Radcom 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 WuXi Biologics with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of WuXi Biologics and Radcom.
Diversification Opportunities for WuXi Biologics and Radcom
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WuXi and Radcom is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding WuXi Biologics and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and WuXi Biologics 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 WuXi Biologics are associated (or correlated) with Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of WuXi Biologics i.e., WuXi Biologics and Radcom go up and down completely randomly.
Pair Corralation between WuXi Biologics and Radcom
Assuming the 90 days horizon WuXi Biologics is expected to generate 1.17 times more return on investment than Radcom. However, WuXi Biologics is 1.17 times more volatile than Radcom. It trades about -0.05 of its potential returns per unit of risk. Radcom is currently generating about -0.27 per unit of risk. If you would invest 174.00 in WuXi Biologics on January 26, 2024 and sell it today you would lose (9.50) from holding WuXi Biologics or give up 5.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
WuXi Biologics vs. Radcom
Performance |
Timeline |
WuXi Biologics |
Radcom |
WuXi Biologics and Radcom Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with WuXi Biologics and Radcom
The main advantage of trading using opposite WuXi Biologics and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WuXi Biologics position performs unexpectedly, Radcom 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 Radcom will offset losses from the drop in Radcom's long position.WuXi Biologics vs. Mymetics Corp | WuXi Biologics vs. HUMANA INC | WuXi Biologics vs. Aquagold International | WuXi Biologics vs. Barloworld Ltd ADR |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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