Correlation Between Radcom and Cedar Fair

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

By analyzing existing cross correlation between Radcom and Cedar Fair LP, you can compare the effects of market volatilities on Radcom and Cedar Fair 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 Cedar Fair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radcom and Cedar Fair.

Diversification Opportunities for Radcom and Cedar Fair

0.34

Correlation Coefficient

Radcom  Cedar Fair

Weak diversification

The 3 months correlation between Radcom and Cedar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Cedar Fair LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Fair LP 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 Cedar Fair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Fair LP has no effect on the direction of Radcom i.e., Radcom and Cedar Fair go up and down completely randomly.

Pair Corralation between Radcom and Cedar Fair

Given the investment horizon of 90 days Radcom is expected to generate 11.12 times less return on investment than Cedar Fair. In addition to that, Radcom is 2.07 times more volatile than Cedar Fair LP. It trades about 0.01 of its total potential returns per unit of risk. Cedar Fair LP is currently generating about 0.24 per unit of volatility. If you would invest  3,943  in Cedar Fair LP on March 4, 2024 and sell it today you would earn a total of  400.00  from holding Cedar Fair LP or generate 10.14% return on investment over 90 days.

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

Radcom  vs.  Cedar Fair LP

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 latest uncertain performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Cedar Fair LP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Fair LP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cedar Fair is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Radcom and Cedar Fair

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

The idea behind Radcom and Cedar Fair LP 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.