Correlation Between Radcom and Aris Mining

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

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

Diversification Opportunities for Radcom and Aris Mining

-0.73

Correlation Coefficient

Radcom  Aris Mining

Pay attention - limited upside

The 3 months correlation between Radcom and Aris is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and Radcom 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 Radcom are associated (or correlated) with Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Radcom i.e., Radcom and Aris Mining go up and down completely randomly.

Pair Corralation between Radcom and Aris Mining

Given the investment horizon of 90 days Radcom is expected to generate 1.14 times more return on investment than Aris Mining. However, Radcom is 1.14 times more volatile than Aris Mining. It trades about 0.17 of its potential returns per unit of risk. Aris Mining is currently generating about -0.11 per unit of risk. If you would invest  1,010  in Radcom on October 25, 2024 and sell it today you would earn a total of  403.00  from holding Radcom or generate 39.9% return on investment over 90 days.

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

Radcom  vs.  Aris Mining

Radcom

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 13 (%) 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.

Aris Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aris Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Radcom and Aris Mining

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

The idea behind Radcom and Aris Mining 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.