Correlation Between Iridium Communications and NetMed

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

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

Diversification Opportunities for Iridium Communications and NetMed

-0.06

Correlation Coefficient

Iridium Communications  NetMed

Good diversification

The 3 months correlation between Iridium and NetMed is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and NetMed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetMed Inc and Iridium Communications 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 Iridium Communications are associated (or correlated) with NetMed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetMed Inc has no effect on the direction of Iridium Communications i.e., Iridium Communications and NetMed go up and down completely randomly.

Pair Corralation between Iridium Communications and NetMed

If you would invest  2,709  in Iridium Communications on September 3, 2024 and sell it today you would earn a total of  263.00  from holding Iridium Communications or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Iridium Communications  vs.  NetMed Inc

Iridium Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Iridium Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NetMed Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetMed Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, NetMed is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Iridium Communications and NetMed

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

The idea behind Iridium Communications and NetMed Inc 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.