Correlation Between Black Diamond and Comtech Telecommunicatio

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

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

Diversification Opportunities for Black Diamond and Comtech Telecommunicatio

0.17

Correlation Coefficient

Black Diamond  Comtech Telecommunicatio

Average diversification

The 3 months correlation between Black and Comtech is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and Black Diamond 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 Black Diamond Therapeutics 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 Black Diamond i.e., Black Diamond and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between Black Diamond and Comtech Telecommunicatio

Given the investment horizon of 90 days Black Diamond Therapeutics is expected to under-perform the Comtech Telecommunicatio. But the stock apears to be less risky and, when comparing its historical volatility, Black Diamond Therapeutics is 1.74 times less risky than Comtech Telecommunicatio. The stock trades about -0.29 of its potential returns per unit of risk. The Comtech Telecommunications Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  327.00  in Comtech Telecommunications Corp on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Comtech Telecommunications Corp or generate 3.36% return on investment over 90 days.

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

Black Diamond Therapeutics  vs.  Comtech Telecommunications Cor

Black Diamond Therap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Diamond Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Comtech Telecommunicatio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Comtech Telecommunications Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile basic indicators, Comtech Telecommunicatio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Diamond and Comtech Telecommunicatio

The main advantage of trading using opposite Black Diamond and Comtech Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond 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 Black Diamond Therapeutics 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.

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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.