Correlation Between Sea and Radcom

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

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

Diversification Opportunities for Sea and Radcom

0.15

Correlation Coefficient

Sea  Radcom

Average diversification

The 3 months correlation between Sea and Radcom is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and Sea 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 Sea are associated (or correlated) with Radcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radcom has no effect on the direction of Sea i.e., Sea and Radcom go up and down completely randomly.

Pair Corralation between Sea and Radcom

Allowing for the 90-day total investment horizon Sea is expected to generate 0.72 times more return on investment than Radcom. However, Sea is 1.39 times less risky than Radcom. It trades about 0.07 of its potential returns per unit of risk. Radcom is currently generating about 0.01 per unit of risk. If you would invest  11,579  in Sea on December 17, 2024 and sell it today you would earn a total of  1,164  from holding Sea or generate 10.05% return on investment over 90 days.

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

Sea  vs.  Radcom

Sea

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Sea and Radcom

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

The idea behind Sea and Radcom 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..