Correlation Between Comtech Telecommunicatio and Franklin Wireless

Can any of the company-specific risk be diversified away by investing in both Comtech Telecommunicatio and Franklin Wireless 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 Franklin Wireless 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 Franklin Wireless Corp, you can compare the effects of market volatilities on Comtech Telecommunicatio and Franklin Wireless 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 Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and Franklin Wireless.

Diversification Opportunities for Comtech Telecommunicatio and Franklin Wireless

-0.53

Correlation Coefficient

Comtech Telecommunicatio  Franklin Wireless

Excellent diversification

The 3 months correlation between Comtech and Franklin is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp 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 Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Franklin Wireless go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Franklin Wireless

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Franklin Wireless. In addition to that, Comtech Telecommunicatio is 2.69 times more volatile than Franklin Wireless Corp. It trades about -0.08 of its total potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.24 per unit of volatility. If you would invest  430.00  in Franklin Wireless Corp on November 28, 2024 and sell it today you would earn a total of  216.00  from holding Franklin Wireless Corp or generate 50.23% return on investment over 90 days.

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

Comtech Telecommunications Cor  vs.  Franklin Wireless Corp

Comtech Telecommunicatio

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Franklin Wireless Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Franklin Wireless disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Comtech Telecommunicatio and Franklin Wireless

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

The idea behind Comtech Telecommunications Corp and Franklin Wireless Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.