Correlation Between CVW CleanTech and Radcom

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

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

Diversification Opportunities for CVW CleanTech and Radcom

0.05

Correlation Coefficient

CVW CleanTech  Radcom

Significant diversification

The 3 months correlation between CVW and Radcom is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and CVW CleanTech 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 CVW CleanTech 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 CVW CleanTech i.e., CVW CleanTech and Radcom go up and down completely randomly.

Pair Corralation between CVW CleanTech and Radcom

Assuming the 90 days horizon CVW CleanTech is expected to under-perform the Radcom. But the otc stock apears to be less risky and, when comparing its historical volatility, CVW CleanTech is 1.34 times less risky than Radcom. The otc stock trades about -0.04 of its potential returns per unit of risk. The Radcom is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,097  in Radcom on October 22, 2024 and sell it today you would earn a total of  311.00  from holding Radcom or generate 28.35% return on investment over 90 days.

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

CVW CleanTech  vs.  Radcom

CVW CleanTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Radcom

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 10 (%) 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 CVW CleanTech and Radcom

The main advantage of trading using opposite CVW CleanTech and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech 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 CVW CleanTech 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 CEOs Directory module to screen CEOs from public companies around the world.