Correlation Between GE Vernova and Radcom

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

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

Diversification Opportunities for GE Vernova and Radcom

0.7

Correlation Coefficient

GE Vernova  Radcom

Poor diversification

The 3 months correlation between GEV and Radcom is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GE Vernova LLC and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and GE Vernova 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 GE Vernova LLC 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 GE Vernova i.e., GE Vernova and Radcom go up and down completely randomly.

Pair Corralation between GE Vernova and Radcom

Considering the 90-day investment horizon GE Vernova is expected to generate 6.07 times less return on investment than Radcom. In addition to that, GE Vernova is 1.15 times more volatile than Radcom. It trades about 0.01 of its total potential returns per unit of risk. Radcom is currently generating about 0.06 per unit of volatility. If you would invest  1,160  in Radcom on December 19, 2024 and sell it today you would earn a total of  108.00  from holding Radcom or generate 9.31% return on investment over 90 days.

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

GE Vernova LLC  vs.  Radcom

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Radcom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 4 (%) 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 GE Vernova and Radcom

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

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.