Correlation Between Radcom and BRC

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

By analyzing existing cross correlation between Radcom and BRC Inc, you can compare the effects of market volatilities on Radcom and BRC 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 BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radcom and BRC.

Diversification Opportunities for Radcom and BRC

0.06

Correlation Coefficient

Radcom  BRC

Significant diversification

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

Pair Corralation between Radcom and BRC

Given the investment horizon of 90 days Radcom is expected to generate 1.14 times more return on investment than BRC. However, Radcom is 1.14 times more volatile than BRC Inc. It trades about 0.06 of its potential returns per unit of risk. BRC Inc is currently generating about -0.14 per unit of risk. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Radcom  vs.  BRC Inc

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.

BRC Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days BRC Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Radcom and BRC

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

The idea behind Radcom and BRC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.