Correlation Between Radcom and ServiceNow

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

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

Diversification Opportunities for Radcom and ServiceNow

0.2

Correlation Coefficient

Radcom  ServiceNow

Modest diversification

The 3 months correlation between Radcom and ServiceNow is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and ServiceNow in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ServiceNow 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 ServiceNow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ServiceNow has no effect on the direction of Radcom i.e., Radcom and ServiceNow go up and down completely randomly.

Pair Corralation between Radcom and ServiceNow

Given the investment horizon of 90 days Radcom is expected to generate 1.82 times more return on investment than ServiceNow. However, Radcom is 1.82 times more volatile than ServiceNow. It trades about 0.07 of its potential returns per unit of risk. ServiceNow is currently generating about -0.06 per unit of risk. If you would invest  1,180  in Radcom on May 4, 2025 and sell it today you would earn a total of  129.00  from holding Radcom or generate 10.93% 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.  ServiceNow

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.

ServiceNow

Risk-Adjusted Performance

Very Weak

Over the last 90 days ServiceNow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ServiceNow is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Radcom and ServiceNow

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

The idea behind Radcom and ServiceNow 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.