Correlation Between FARO Technologies and Radcom
Can any of the company-specific risk be diversified away by investing in both FARO Technologies 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 FARO Technologies and Radcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Radcom, you can compare the effects of market volatilities on FARO Technologies 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 FARO Technologies with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Radcom.
Diversification Opportunities for FARO Technologies and Radcom
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FARO and Radcom is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and FARO Technologies 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 FARO Technologies 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 FARO Technologies i.e., FARO Technologies and Radcom go up and down completely randomly.
Pair Corralation between FARO Technologies and Radcom
Given the investment horizon of 90 days FARO Technologies is expected to generate 1.51 times more return on investment than Radcom. However, FARO Technologies is 1.51 times more volatile than Radcom. It trades about 0.15 of its potential returns per unit of risk. Radcom is currently generating about 0.11 per unit of risk. If you would invest 1,742 in FARO Technologies on August 23, 2024 and sell it today you would earn a total of 888.00 from holding FARO Technologies or generate 50.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Radcom
Performance |
| Timeline |
| FARO Technologies |
| Radcom |
FARO Technologies and Radcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Radcom
The main advantage of trading using opposite FARO Technologies and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies 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.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
| Radcom vs. Shenandoah Telecommunications Co | Radcom vs. Anterix | Radcom vs. SK Telecom Co | Radcom vs. Liberty Broadband Srs |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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