Correlation Between Radcom and Hudson Technologies

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

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

Diversification Opportunities for Radcom and Hudson Technologies

0.09

Correlation Coefficient

Radcom  Hudson Technologies

Significant diversification

The 3 months correlation between Radcom and Hudson is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Hudson Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Technologies 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 Hudson Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Technologies has no effect on the direction of Radcom i.e., Radcom and Hudson Technologies go up and down completely randomly.

Pair Corralation between Radcom and Hudson Technologies

Given the investment horizon of 90 days Radcom is expected to generate 3.44 times less return on investment than Hudson Technologies. In addition to that, Radcom is 2.0 times more volatile than Hudson Technologies. It trades about 0.02 of its total potential returns per unit of risk. Hudson Technologies is currently generating about 0.11 per unit of volatility. If you would invest  546.00  in Hudson Technologies on December 28, 2024 and sell it today you would earn a total of  72.00  from holding Hudson Technologies or generate 13.19% return on investment over 90 days.

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

Radcom  vs.  Hudson Technologies

Radcom

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Radcom is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hudson Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Hudson Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radcom and Hudson Technologies

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

The idea behind Radcom and Hudson Technologies 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.