Correlation Between Supercom and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Supercom and Iridium Communications 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 Supercom and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supercom and Iridium Communications, you can compare the effects of market volatilities on Supercom and Iridium Communications 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 Supercom with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supercom and Iridium Communications.
Diversification Opportunities for Supercom and Iridium Communications
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Supercom and Iridium is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Supercom and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Supercom 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 Supercom are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Supercom i.e., Supercom and Iridium Communications go up and down completely randomly.
Pair Corralation between Supercom and Iridium Communications
Given the investment horizon of 90 days Supercom is expected to generate 4.34 times more return on investment than Iridium Communications. However, Supercom is 4.34 times more volatile than Iridium Communications. It trades about -0.01 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.07 per unit of risk. If you would invest 2,180 in Supercom on August 31, 2024 and sell it today you would lose (1,814) from holding Supercom or give up 83.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supercom vs. Iridium Communications
Performance |
| Timeline |
| Supercom |
| Iridium Communications |
Supercom and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supercom and Iridium Communications
The main advantage of trading using opposite Supercom and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supercom position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Supercom vs. Zedcor Inc | Supercom vs. SSC Security Services | Supercom vs. Blue Line Protection | Supercom vs. Guardforce AI Co |
| Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One | Iridium Communications vs. SK Telecom Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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