Correlation Between Comtech Telecommunicatio and Ezenia

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

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

Diversification Opportunities for Comtech Telecommunicatio and Ezenia

0.08

Correlation Coefficient

Comtech Telecommunicatio  Ezenia

Significant diversification

The 3 months correlation between Comtech and Ezenia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Ezenia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ezenia Inc and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with Ezenia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ezenia Inc has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Ezenia go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Ezenia

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Ezenia. In addition to that, Comtech Telecommunicatio is 7.01 times more volatile than Ezenia Inc. It trades about -0.01 of its total potential returns per unit of risk. Ezenia Inc is currently generating about 0.26 per unit of volatility. If you would invest  2.70  in Ezenia Inc on October 11, 2024 and sell it today you would earn a total of  0.10  from holding Ezenia Inc or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.02%
Values	Daily Returns

Comtech Telecommunications Cor  vs.  Ezenia Inc

Comtech Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Comtech Telecommunicatio is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Ezenia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ezenia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Ezenia is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Comtech Telecommunicatio and Ezenia

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

The idea behind Comtech Telecommunications Corp and Ezenia Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.