Correlation Between Access Power and Radcom

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

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

Diversification Opportunities for Access Power and Radcom

0.23

Correlation Coefficient

Access Power  Radcom

Modest diversification

The 3 months correlation between Access and Radcom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Access Power Co and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and Access Power 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 Access Power Co 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 Access Power i.e., Access Power and Radcom go up and down completely randomly.

Pair Corralation between Access Power and Radcom

Given the investment horizon of 90 days Access Power Co is expected to generate 11.64 times more return on investment than Radcom. However, Access Power is 11.64 times more volatile than Radcom. It trades about 0.12 of its potential returns per unit of risk. Radcom is currently generating about 0.04 per unit of risk. If you would invest  0.22  in Access Power Co on October 22, 2024 and sell it today you would lose (0.12) from holding Access Power Co or give up 54.55% of portfolio value over 90 days.

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

Access Power Co  vs.  Radcom

Access Power

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

Radcom

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Access Power and Radcom

The main advantage of trading using opposite Access Power and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Power 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.

The idea behind Access Power Co and Radcom 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.