Correlation Between Connecticut Light and Radcom

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

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

Diversification Opportunities for Connecticut Light and Radcom

-0.59

Correlation Coefficient

Connecticut Light  Radcom

Excellent diversification

The 3 months correlation between Connecticut and Radcom is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and Connecticut Light 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 The Connecticut Light 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 Connecticut Light i.e., Connecticut Light and Radcom go up and down completely randomly.

Pair Corralation between Connecticut Light and Radcom

Assuming the 90 days horizon Connecticut Light is expected to generate 3.59 times less return on investment than Radcom. In addition to that, Connecticut Light is 1.3 times more volatile than Radcom. It trades about 0.0 of its total potential returns per unit of risk. Radcom is currently generating about 0.02 per unit of volatility. If you would invest  1,095  in Radcom on October 7, 2024 and sell it today you would earn a total of  120.00  from holding Radcom or generate 10.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	78.02%
Values	Daily Returns

The Connecticut Light  vs.  Radcom

Connecticut Light

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Connecticut Light has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Radcom

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 8 (%) 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 Connecticut Light and Radcom

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

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.