Correlation Between Graphic Packaging and Radcom

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

By analyzing existing cross correlation between Graphic Packaging Holding and Radcom, you can compare the effects of market volatilities on Graphic Packaging 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 Graphic Packaging with a short position of Radcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphic Packaging and Radcom.

Diversification Opportunities for Graphic Packaging and Radcom

0.18

Correlation Coefficient

Graphic Packaging  Radcom

Average diversification

The 3 months correlation between Graphic and Radcom is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Graphic Packaging Holding and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and Graphic Packaging 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 Graphic Packaging Holding 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 Graphic Packaging i.e., Graphic Packaging and Radcom go up and down completely randomly.

Pair Corralation between Graphic Packaging and Radcom

Considering the 90-day investment horizon Graphic Packaging Holding is expected to generate 0.43 times more return on investment than Radcom. However, Graphic Packaging Holding is 2.32 times less risky than Radcom. It trades about 0.13 of its potential returns per unit of risk. Radcom is currently generating about 0.0 per unit of risk. If you would invest  2,465  in Graphic Packaging Holding on February 19, 2024 and sell it today you would earn a total of  348.00  from holding Graphic Packaging Holding or generate 14.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Graphic Packaging Holding  vs.  Radcom

Graphic Packaging Holding

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graphic Packaging Holding are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Graphic Packaging disclosed solid returns over the last few months and may actually be approaching a breakup point.

Radcom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Radcom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Radcom is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Graphic Packaging and Radcom

The main advantage of trading using opposite Graphic Packaging and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphic Packaging 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.

The idea behind Graphic Packaging Holding 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.

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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.