Correlation Between PFIZER and Radcom

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

By analyzing existing cross correlation between PFIZER INC 43 and Radcom, you can compare the effects of market volatilities on PFIZER 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 PFIZER with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of PFIZER and Radcom.

Diversification Opportunities for PFIZER and Radcom

-0.45

Correlation Coefficient

PFIZER  Radcom

Very good diversification

The 3 months correlation between PFIZER and Radcom is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding PFIZER INC 43 and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and PFIZER 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 PFIZER INC 43 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 PFIZER i.e., PFIZER and Radcom go up and down completely randomly.

Pair Corralation between PFIZER and Radcom

Assuming the 90 days trading horizon PFIZER INC 43 is expected to under-perform the Radcom. But the bond apears to be less risky and, when comparing its historical volatility, PFIZER INC 43 is 4.22 times less risky than Radcom. The bond trades about -0.11 of its potential returns per unit of risk. The Radcom is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in Radcom on October 6, 2024 and sell it today you would earn a total of  215.00  from holding Radcom or generate 21.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	80.65%
Values	Daily Returns

PFIZER INC 43  vs.  Radcom

PFIZER INC 43

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PFIZER INC 43 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PFIZER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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

Pair Trading with PFIZER and Radcom

The main advantage of trading using opposite PFIZER and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PFIZER 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 PFIZER INC 43 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 Commodity Directory module to find actively traded commodities issued by global exchanges.