Correlation Between Radcom and Cencora

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

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

Diversification Opportunities for Radcom and Cencora

-0.21

Correlation Coefficient

Radcom  Cencora

Very good diversification

The 3 months correlation between Radcom and Cencora is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Cencora in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cencora 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 Cencora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cencora has no effect on the direction of Radcom i.e., Radcom and Cencora go up and down completely randomly.

Pair Corralation between Radcom and Cencora

Given the investment horizon of 90 days Radcom is expected to generate 1.79 times less return on investment than Cencora. In addition to that, Radcom is 3.45 times more volatile than Cencora. It trades about 0.04 of its total potential returns per unit of risk. Cencora is currently generating about 0.26 per unit of volatility. If you would invest  22,608  in Cencora on December 25, 2024 and sell it today you would earn a total of  4,239  from holding Cencora or generate 18.75% return on investment over 90 days.

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

Radcom  vs.  Cencora

Radcom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Cencora

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Cencora reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radcom and Cencora

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

The idea behind Radcom and Cencora 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.