Correlation Between Supercom and Evolv Technologies

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

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

Diversification Opportunities for Supercom and Evolv Technologies

0.43

Correlation Coefficient

Supercom  Evolv Technologies

Very weak diversification

The 3 months correlation between Supercom and Evolv is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Supercom and Evolv Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolv Technologies and Supercom 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 Supercom are associated (or correlated) with Evolv Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolv Technologies has no effect on the direction of Supercom i.e., Supercom and Evolv Technologies go up and down completely randomly.

Pair Corralation between Supercom and Evolv Technologies

Given the investment horizon of 90 days Supercom is expected to generate 1.01 times more return on investment than Evolv Technologies. However, Supercom is 1.01 times more volatile than Evolv Technologies Holdings. It trades about 0.08 of its potential returns per unit of risk. Evolv Technologies Holdings is currently generating about -0.02 per unit of risk. If you would invest  595.00  in Supercom on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Supercom or generate 22.69% return on investment over 90 days.

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

Supercom  vs.  Evolv Technologies Holdings

Supercom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Supercom are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Supercom sustained solid returns over the last few months and may actually be approaching a breakup point.

Evolv Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolv Technologies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Supercom and Evolv Technologies

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

The idea behind Supercom and Evolv Technologies Holdings 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.