Correlation Between Motorola Solutions and Sonim Technologies

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

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

Diversification Opportunities for Motorola Solutions and Sonim Technologies

0.58

Correlation Coefficient

Motorola Solutions  Sonim Technologies

Very weak diversification

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

Pair Corralation between Motorola Solutions and Sonim Technologies

Considering the 90-day investment horizon Motorola Solutions is expected to generate 3.14 times less return on investment than Sonim Technologies. But when comparing it to its historical volatility, Motorola Solutions is 3.28 times less risky than Sonim Technologies. It trades about 0.11 of its potential returns per unit of risk. Sonim Technologies is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  262.00  in Sonim Technologies on September 12, 2024 and sell it today you would earn a total of  67.00  from holding Sonim Technologies or generate 25.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Motorola Solutions  vs.  Sonim Technologies

Motorola Solutions

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Motorola Solutions may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sonim Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sonim Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Sonim Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Motorola Solutions and Sonim Technologies

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

The idea behind Motorola Solutions and Sonim Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.