Correlation Between California Resources and Radcom

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

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

Diversification Opportunities for California Resources and Radcom

0.72

Correlation Coefficient

California Resources  Radcom

Poor diversification

The 3 months correlation between California and Radcom is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding California Resources Corp and Radcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radcom and California Resources 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 California Resources Corp 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 California Resources i.e., California Resources and Radcom go up and down completely randomly.

Pair Corralation between California Resources and Radcom

Considering the 90-day investment horizon California Resources Corp is expected to generate 0.77 times more return on investment than Radcom. However, California Resources Corp is 1.3 times less risky than Radcom. It trades about 0.22 of its potential returns per unit of risk. Radcom is currently generating about 0.07 per unit of risk. If you would invest  3,462  in California Resources Corp on May 4, 2025 and sell it today you would earn a total of  1,220  from holding California Resources Corp or generate 35.24% return on investment over 90 days.

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

California Resources Corp  vs.  Radcom

California Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in California Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, California Resources exhibited solid returns over the last few months and may actually be approaching a breakup point.

Radcom

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with California Resources and Radcom

The main advantage of trading using opposite California Resources and Radcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California Resources 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 California Resources Corp 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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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.