Correlation Between NEXEN and Radcom

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Can any of the company-specific risk be diversified away by investing in both NEXEN 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 NEXEN and Radcom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXEN INC 64 and Radcom, you can compare the effects of market volatilities on NEXEN 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 NEXEN with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXEN and Radcom.

Diversification Opportunities for NEXEN and Radcom

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between NEXEN and Radcom is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NEXEN INC 64 and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and NEXEN 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 NEXEN INC 64 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 NEXEN i.e., NEXEN and Radcom go up and down completely randomly.

Pair Corralation between NEXEN and Radcom

Assuming the 90 days trading horizon NEXEN is expected to generate 1.7 times less return on investment than Radcom. But when comparing it to its historical volatility, NEXEN INC 64 is 2.97 times less risky than Radcom. It trades about 0.14 of its potential returns per unit of risk. Radcom is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  939.00  in Radcom on September 2, 2024 and sell it today you would earn a total of  256.00  from holding Radcom or generate 27.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy19.84%
ValuesDaily Returns

NEXEN INC 64  vs.  Radcom

 Performance 
       Timeline  
NEXEN INC 64 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NEXEN INC 64 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for NEXEN INC 64 investors.
Radcom 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

NEXEN and Radcom Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEXEN and Radcom

The main advantage of trading using opposite NEXEN and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXEN 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.
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The idea behind NEXEN INC 64 and Radcom 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.
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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