Correlation Between Comtech Telecommunicatio and Technical Communications

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

Diversification Opportunities for Comtech Telecommunicatio and Technical Communications

-0.11

Correlation Coefficient

Comtech Telecommunicatio  Technical Communications

Good diversification

The 3 months correlation between Comtech and Technical is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and Technical Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technical Communications 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 Technical Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technical Communications has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and Technical Communications go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and Technical Communications

If you would invest  255.00  in Comtech Telecommunications Corp on October 10, 2024 and sell it today you would earn a total of  134.00  from holding Comtech Telecommunications Corp or generate 52.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

Comtech Telecommunications Cor  vs.  Technical Communications

Comtech Telecommunicatio

Risk-Adjusted Performance

0 of 100

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.

Technical Communications

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Comtech Telecommunicatio and Technical Communications

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

The idea behind Comtech Telecommunications Corp and Technical Communications 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.