Correlation Between Radcom and Garden Stage
Can any of the company-specific risk be diversified away by investing in both Radcom and Garden Stage 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 Radcom and Garden Stage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radcom and Garden Stage Limited, you can compare the effects of market volatilities on Radcom and Garden Stage 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 Radcom with a short position of Garden Stage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radcom and Garden Stage.
Diversification Opportunities for Radcom and Garden Stage
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Radcom and Garden is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Garden Stage Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garden Stage Limited and Radcom 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 Radcom are associated (or correlated) with Garden Stage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garden Stage Limited has no effect on the direction of Radcom i.e., Radcom and Garden Stage go up and down completely randomly.
Pair Corralation between Radcom and Garden Stage
Given the investment horizon of 90 days Radcom is expected to generate 0.57 times more return on investment than Garden Stage. However, Radcom is 1.76 times less risky than Garden Stage. It trades about 0.2 of its potential returns per unit of risk. Garden Stage Limited is currently generating about -0.33 per unit of risk. If you would invest 1,008 in Radcom on August 27, 2024 and sell it today you would earn a total of 154.00 from holding Radcom or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radcom vs. Garden Stage Limited
Performance |
| Timeline |
| Radcom |
| Garden Stage Limited |
Radcom and Garden Stage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radcom and Garden Stage
The main advantage of trading using opposite Radcom and Garden Stage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radcom position performs unexpectedly, Garden Stage 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 Garden Stage will offset losses from the drop in Garden Stage's long position.The idea behind Radcom and Garden Stage Limited 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.| Garden Stage vs. Weyco Group | Garden Stage vs. Radcom | Garden Stage vs. Edgewell Personal Care | Garden Stage vs. European Wax Center |
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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