Correlation Between Radcom and SFL

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Can any of the company-specific risk be diversified away by investing in both Radcom and SFL 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 SFL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radcom and SFL Corporation, you can compare the effects of market volatilities on Radcom and SFL 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 SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radcom and SFL.

Diversification Opportunities for Radcom and SFL

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Radcom and SFL is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Radcom i.e., Radcom and SFL go up and down completely randomly.

Pair Corralation between Radcom and SFL

Given the investment horizon of 90 days Radcom is expected to generate 1.18 times less return on investment than SFL. In addition to that, Radcom is 1.71 times more volatile than SFL Corporation. It trades about 0.02 of its total potential returns per unit of risk. SFL Corporation is currently generating about 0.04 per unit of volatility. If you would invest  828.00  in SFL Corporation on October 11, 2024 and sell it today you would earn a total of  234.00  from holding SFL Corporation or generate 28.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Radcom  vs.  SFL Corp.

 Performance 
       Timeline  
Radcom 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 6 (%) 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.
SFL Corporation 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, SFL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Radcom and SFL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Radcom and SFL

The main advantage of trading using opposite Radcom and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radcom position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL's long position.
The idea behind Radcom and SFL Corporation 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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