Correlation Between VerifyMe and Radcom

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

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

Diversification Opportunities for VerifyMe and Radcom

-0.76

Correlation Coefficient

VerifyMe  Radcom

Pay attention - limited upside

The 3 months correlation between VerifyMe and Radcom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and VerifyMe 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 VerifyMe 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 VerifyMe i.e., VerifyMe and Radcom go up and down completely randomly.

Pair Corralation between VerifyMe and Radcom

Given the investment horizon of 90 days VerifyMe is expected to under-perform the Radcom. In addition to that, VerifyMe is 1.72 times more volatile than Radcom. It trades about -0.13 of its total potential returns per unit of risk. Radcom is currently generating about 0.11 per unit of volatility. If you would invest  974.00  in Radcom on September 1, 2024 and sell it today you would earn a total of  221.00  from holding Radcom or generate 22.69% return on investment over 90 days.

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

VerifyMe  vs.  Radcom

VerifyMe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VerifyMe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 VerifyMe and Radcom

The main advantage of trading using opposite VerifyMe and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VerifyMe 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 VerifyMe 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.