Correlation Between Comtech Telecommunicatio and Sonim Technologies

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

Diversification Opportunities for Comtech Telecommunicatio and Sonim Technologies

-0.15

Correlation Coefficient

Comtech Telecommunicatio  Sonim Technologies

Good diversification

The 3 months correlation between Comtech and Sonim is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Sonim Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonim Technologies 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 Sonim Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonim Technologies has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Sonim Technologies go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Sonim Technologies

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Sonim Technologies. In addition to that, Comtech Telecommunicatio is 1.24 times more volatile than Sonim Technologies. It trades about -0.02 of its total potential returns per unit of risk. Sonim Technologies is currently generating about 0.01 per unit of volatility. If you would invest  514.00  in Sonim Technologies on October 27, 2024 and sell it today you would lose (187.00) from holding Sonim Technologies or give up 36.38% of portfolio value over 90 days.

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

Comtech Telecommunications Cor  vs.  Sonim Technologies

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

Sonim Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Comtech Telecommunicatio and Sonim Technologies

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

The idea behind Comtech Telecommunications Corp and Sonim Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.