Correlation Between Iridium Communications and Comba Telecom

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

Diversification Opportunities for Iridium Communications and Comba Telecom

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Iridium and Comba is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Comba Telecom Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comba Telecom Systems and Iridium Communications 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 Iridium Communications are associated (or correlated) with Comba Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comba Telecom Systems has no effect on the direction of Iridium Communications i.e., Iridium Communications and Comba Telecom go up and down completely randomly.

Pair Corralation between Iridium Communications and Comba Telecom

Assuming the 90 days horizon Iridium Communications is expected to generate 0.47 times more return on investment than Comba Telecom. However, Iridium Communications is 2.12 times less risky than Comba Telecom. It trades about 0.1 of its potential returns per unit of risk. Comba Telecom Systems is currently generating about 0.02 per unit of risk. If you would invest  2,841  in Iridium Communications on September 12, 2024 and sell it today you would earn a total of  133.00  from holding Iridium Communications or generate 4.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Iridium Communications  vs.  Comba Telecom Systems

 Performance 
       Timeline  
Iridium Communications 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Iridium Communications are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Iridium Communications reported solid returns over the last few months and may actually be approaching a breakup point.
Comba Telecom Systems 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Comba Telecom Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Comba Telecom is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Iridium Communications and Comba Telecom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Iridium Communications and Comba Telecom

The main advantage of trading using opposite Iridium Communications and Comba Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Comba Telecom 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 Comba Telecom will offset losses from the drop in Comba Telecom's long position.
The idea behind Iridium Communications and Comba Telecom Systems 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.
Check out your portfolio center.
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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