Correlation Between Deswell Industries and Radware

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

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

Diversification Opportunities for Deswell Industries and Radware

0.73

Correlation Coefficient

Deswell Industries  Radware

Poor diversification

The 3 months correlation between Deswell and Radware is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Deswell Industries and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware and Deswell Industries 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 Deswell Industries are associated (or correlated) with Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Deswell Industries i.e., Deswell Industries and Radware go up and down completely randomly.

Pair Corralation between Deswell Industries and Radware

Given the investment horizon of 90 days Deswell Industries is expected to generate 1.22 times more return on investment than Radware. However, Deswell Industries is 1.22 times more volatile than Radware. It trades about 0.2 of its potential returns per unit of risk. Radware is currently generating about 0.08 per unit of risk. If you would invest  214.00  in Deswell Industries on May 5, 2025 and sell it today you would earn a total of  80.00  from holding Deswell Industries or generate 37.38% return on investment over 90 days.

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

Deswell Industries  vs.  Radware

Deswell Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deswell Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Deswell Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Radware

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Radware may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Deswell Industries and Radware

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

The idea behind Deswell Industries and Radware 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.