Correlation Between Alpha and Comtech Telecommunicatio

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

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

Diversification Opportunities for Alpha and Comtech Telecommunicatio

0.84

Correlation Coefficient

Alpha  Comtech Telecommunicatio

Very poor diversification

The 3 months correlation between Alpha and Comtech is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alpha and Omega and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and Alpha 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 Alpha and Omega are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of Alpha i.e., Alpha and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between Alpha and Comtech Telecommunicatio

Given the investment horizon of 90 days Alpha is expected to generate 1.44 times less return on investment than Comtech Telecommunicatio. But when comparing it to its historical volatility, Alpha and Omega is 1.81 times less risky than Comtech Telecommunicatio. It trades about 0.2 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  140.00  in Comtech Telecommunications Corp on April 24, 2025 and sell it today you would earn a total of  85.00  from holding Comtech Telecommunications Corp or generate 60.71% return on investment over 90 days.

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

Alpha and Omega  vs.  Comtech Telecommunications Cor

Alpha and Omega

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Comtech Telecommunicatio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alpha and Comtech Telecommunicatio

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

The idea behind Alpha and Omega and Comtech Telecommunications Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.