Correlation Between Comtech Telecommunicatio and VerifyMe

Can any of the company-specific risk be diversified away by investing in both Comtech Telecommunicatio and VerifyMe 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 Comtech Telecommunicatio and VerifyMe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comtech Telecommunications Corp and VerifyMe, you can compare the effects of market volatilities on Comtech Telecommunicatio and VerifyMe 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 Comtech Telecommunicatio with a short position of VerifyMe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and VerifyMe.

Diversification Opportunities for Comtech Telecommunicatio and VerifyMe

Very good diversification

The 3 months correlation between Comtech and VerifyMe is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Comtech Telecommunications Cor and VerifyMe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VerifyMe and Comtech Telecommunicatio 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 Comtech Telecommunications Corp are associated (or correlated) with VerifyMe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VerifyMe has no effect on the direction of Comtech Telecommunicatio i.e., Comtech Telecommunicatio and VerifyMe go up and down completely randomly.

Pair Corralation between Comtech Telecommunicatio and VerifyMe

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the VerifyMe. But the stock apears to be less risky and, when comparing its historical volatility, Comtech Telecommunications Corp is 1.75 times less risky than VerifyMe. The stock trades about -0.27 of its potential returns per unit of risk. The VerifyMe is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  117.00  in VerifyMe on June 28, 2023 and sell it today you would lose (3.00) from holding VerifyMe or give up 2.56% of portfolio value over 90 days.

Comtech Telecommunications Cor  vs.  VerifyMe

Comtech Telecommunicatio

Comtech Performance

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Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Comtech Telecommunicatio is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

VerifyMe

VerifyMe Performance

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Over the last 90 days VerifyMe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Comtech Telecommunicatio and VerifyMe

The main advantage of trading using opposite Comtech Telecommunicatio and VerifyMe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Comtech Telecommunicatio position performs unexpectedly, VerifyMe 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 VerifyMe will offset losses from the drop in VerifyMe's long position.

The idea behind Comtech Telecommunications Corp and VerifyMe 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.