Correlation Between CommScope Holding and Comtech Telecommunicatio

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

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

Diversification Opportunities for CommScope Holding and Comtech Telecommunicatio

-0.03

Correlation Coefficient

CommScope Holding  Comtech Telecommunicatio

Good diversification

The 3 months correlation between CommScope and Comtech is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CommScope Holding Co and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and CommScope Holding 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 CommScope Holding Co are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of CommScope Holding i.e., CommScope Holding and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between CommScope Holding and Comtech Telecommunicatio

Given the investment horizon of 90 days CommScope Holding Co is expected to generate 0.59 times more return on investment than Comtech Telecommunicatio. However, CommScope Holding Co is 1.69 times less risky than Comtech Telecommunicatio. It trades about 0.03 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about -0.12 per unit of risk. If you would invest  526.00  in CommScope Holding Co on December 30, 2024 and sell it today you would earn a total of  11.00  from holding CommScope Holding Co or generate 2.09% return on investment over 90 days.

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

CommScope Holding Co  vs.  Comtech Telecommunications Cor

CommScope Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CommScope Holding Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent primary indicators, CommScope Holding may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CommScope Holding and Comtech Telecommunicatio

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

The idea behind CommScope Holding Co and Comtech Telecommunications 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.