Correlation Between Radcom and Lion One

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

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

Diversification Opportunities for Radcom and Lion One

-0.18

Correlation Coefficient

Radcom  Lion One

Good diversification

The 3 months correlation between Radcom and Lion is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Radcom i.e., Radcom and Lion One go up and down completely randomly.

Pair Corralation between Radcom and Lion One

Given the investment horizon of 90 days Radcom is expected to generate 1.16 times more return on investment than Lion One. However, Radcom is 1.16 times more volatile than Lion One Metals. It trades about 0.11 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.01 per unit of risk. If you would invest  974.00  in Radcom on September 3, 2024 and sell it today you would earn a total of  221.00  from holding Radcom or generate 22.69% return on investment over 90 days.

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

Radcom  vs.  Lion One Metals

Radcom

Risk-Adjusted Performance

8 of 100

OK

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

Lion One Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Lion One is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Radcom and Lion One

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

The idea behind Radcom and Lion One Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.