Correlation Between Radcom and SAIHEAT

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

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

Diversification Opportunities for Radcom and SAIHEAT

0.73

Correlation Coefficient

Radcom  SAIHEAT

Poor diversification

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

Pair Corralation between Radcom and SAIHEAT

Given the investment horizon of 90 days Radcom is expected to generate 21.01 times less return on investment than SAIHEAT. But when comparing it to its historical volatility, Radcom is 11.1 times less risky than SAIHEAT. It trades about 0.11 of its potential returns per unit of risk. SAIHEAT Limited is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4.00  in SAIHEAT Limited on September 15, 2024 and sell it today you would earn a total of  5.59  from holding SAIHEAT Limited or generate 139.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	50.0%
Values	Daily Returns

Radcom  vs.  SAIHEAT Limited

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 fragile fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

SAIHEAT Limited

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days SAIHEAT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating technical indicators, SAIHEAT showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radcom and SAIHEAT

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

The idea behind Radcom and SAIHEAT Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.