Correlation Between Excelsior Medical and Radiant Innovation

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

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

Diversification Opportunities for Excelsior Medical and Radiant Innovation

-0.65

Correlation Coefficient

Excelsior Medical  Radiant Innovation

Excellent diversification

The 3 months correlation between Excelsior and Radiant is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Excelsior Medical Co and Radiant Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Innovation and Excelsior Medical 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 Excelsior Medical Co are associated (or correlated) with Radiant Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Innovation has no effect on the direction of Excelsior Medical i.e., Excelsior Medical and Radiant Innovation go up and down completely randomly.

Pair Corralation between Excelsior Medical and Radiant Innovation

Assuming the 90 days trading horizon Excelsior Medical Co is expected to generate 0.79 times more return on investment than Radiant Innovation. However, Excelsior Medical Co is 1.27 times less risky than Radiant Innovation. It trades about -0.24 of its potential returns per unit of risk. Radiant Innovation is currently generating about -0.21 per unit of risk. If you would invest  9,740  in Excelsior Medical Co on January 30, 2024 and sell it today you would lose (580.00) from holding Excelsior Medical Co or give up 5.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Excelsior Medical Co  vs.  Radiant Innovation

Excelsior Medical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excelsior Medical Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excelsior Medical may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Radiant Innovation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radiant Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in May 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Excelsior Medical and Radiant Innovation

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

The idea behind Excelsior Medical Co and Radiant Innovation 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.