Correlation Between MNW and Radworks

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

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

Diversification Opportunities for MNW and Radworks

0.57

Correlation Coefficient

MNW  Radworks

Very weak diversification

The 3 months correlation between MNW and Radworks is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding MNW and Radworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radworks and MNW 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 MNW are associated (or correlated) with Radworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radworks has no effect on the direction of MNW i.e., MNW and Radworks go up and down completely randomly.

Pair Corralation between MNW and Radworks

Assuming the 90 days trading horizon MNW is expected to generate 0.88 times more return on investment than Radworks. However, MNW is 1.14 times less risky than Radworks. It trades about -0.08 of its potential returns per unit of risk. Radworks is currently generating about -0.23 per unit of risk. If you would invest  103.00  in MNW on February 7, 2024 and sell it today you would lose (13.00) from holding MNW or give up 12.62% of portfolio value over 90 days.

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

MNW  vs.  Radworks

MNW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MNW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for MNW shareholders.

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 June 2024.

Pair Trading with MNW and Radworks

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

The idea behind MNW and Radworks 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.