Correlation Between Radcom and Gentex

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

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

Diversification Opportunities for Radcom and Gentex

0.58

Correlation Coefficient

Radcom  Gentex

Very weak diversification

The 3 months correlation between Radcom and Gentex is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex 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 Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of Radcom i.e., Radcom and Gentex go up and down completely randomly.

Pair Corralation between Radcom and Gentex

Given the investment horizon of 90 days Radcom is expected to generate 1.36 times less return on investment than Gentex. In addition to that, Radcom is 1.15 times more volatile than Gentex. It trades about 0.09 of its total potential returns per unit of risk. Gentex is currently generating about 0.14 per unit of volatility. If you would invest  2,151  in Gentex on May 3, 2025 and sell it today you would earn a total of  491.00  from holding Gentex or generate 22.83% return on investment over 90 days.

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

Radcom  vs.  Gentex

Radcom

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 7 (%) 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.

Gentex

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gentex are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Gentex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radcom and Gentex

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

The idea behind Radcom and Gentex 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.