NEW YORK ( TheStreet) -- It used to be that tech stocks could give you the equivalent of a thrill ride -- a big potential payoff but some bellyaches along the way. Since the financial crisis started last year, it's been insurers' turn, and even though many companies have become more stable, there are still stocks out there for adrenaline junkies. The most extreme example is American International Group ( AIG - Get Report), which was left for dead last year but is now a walking-zombie stock. The other two thrill rides are MBIA ( MBI - Get Report) and Radian Group ( RDN - Get Report). To make money off those three stocks, it's not important whether you think the companies are solid investment propositions. There are ginormous risks involved, and you should consider them speculative investments. Each has compelling reasons why, and why not, to invest but, either way, the risks could turn into massive rewards. About a week ago, AIG was trading around $39, MBIA $4 and Radian $6. Their 52-week trading ranges speak volumes about volatility: $7 to $56 for AIG, $2 to $73 for MBIA, and $1 to $12 for Radian. Since then, MBIA reported a third-quarter loss of $728 million and AIG had the (mis)fortune of receiving the misguided blessings of ratings company Moody's, followed by news that Chief Executive Officer Robert Benmosche was considering calling it a day. (He later said he's staying.) On Tuesday, the shares of AIG, MBIA and Radian fell 4.2%, 14.4% and 4.4%, respectively, from a week earlier. Yesterday, AIG dropped 2.4%, but MBIA jumped 6.5% and Radian rose 3.2%. With the three companies, there's a difference between perceived and real risks. Look at beta, a measure of volatility, a risk factor. Radian leads the field at 2, followed by MBIA at 1.72 and AIG at 1.38. (The overall market has a beta of 1.) Tuesday's trading was a good example of beta. MBIA tumbled 27%, Radian tumbled 12%, and AIG rose 3.9%.
Radian is partially a victim of circumstance. Mortgage insurance was one of the worst businesses to be in as the financial crisis took hold. The stock was crushed, but then surged 54% this year, held back by 43% decline in a month. Radian had better-than-expected results in the third quarter, recording a $70.5 million loss, but it was still worse than a year earlier. MBIA has gotten itself into a pickle. Mixed up in the guarantee of financial instruments, the company has taken on some of AIG's worst traits, such as gambling, and then gets hit with a downgrade by Standard & Poor's in September. The pain isn't over: S&P said losses will continue to rise. For its part, MBIA said losses will peak at year-end, becoming net receivables in 2011. Ambac ( ABK), potentially facing closure because of capital shortfalls, returned better-than-expected results because of unrealized gains. Remember that unrealized losses and gains exist only on paper. Are there fundamental reasons to buy any of the three stocks? Yes and no. Radian is looking strong, with a price-to-book-value of 22%. It has a big upside potential. MBIA is harder to discern. The company gives the impression that, with a low price-to-book-value of 27%, value comes along with volatility. Perhaps it does, but even with increased cash and policy income, there is still risk. On the other end of the scale, and demonstrating why it deserves to be considered a cautionary tale, is AIG. It had a price-to-book-value of 35% before third-quarter figures were released. It rose to more than 100% on Tuesday and closed at 97.5% on Wednesday. That's some change, and the smart money will be looking for the price to go down. -- Reported by Gavin Magor in Jupiter, Fla.