Correlation Between Hello and Radcom
Can any of the company-specific risk be diversified away by investing in both Hello 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 Hello and Radcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hello Group and Radcom, you can compare the effects of market volatilities on Hello 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 Hello with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hello and Radcom.
Diversification Opportunities for Hello and Radcom
Average diversification
The 3 months correlation between Hello and Radcom is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hello Group and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and Hello 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 Hello Group 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 Hello i.e., Hello and Radcom go up and down completely randomly.
Pair Corralation between Hello and Radcom
Given the investment horizon of 90 days Hello Group is expected to under-perform the Radcom. But the stock apears to be less risky and, when comparing its historical volatility, Hello Group is 1.67 times less risky than Radcom. The stock trades about -0.13 of its potential returns per unit of risk. The Radcom is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,059 in Radcom on August 25, 2024 and sell it today you would earn a total of 103.00 from holding Radcom or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hello Group vs. Radcom
Performance |
| Timeline |
| Hello Group |
| Radcom |
Hello and Radcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hello and Radcom
The main advantage of trading using opposite Hello and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hello 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.| Hello vs. Weibo Corp | Hello vs. Autohome | Hello vs. Tencent Music Entertainment | Hello vs. DouYu International Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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