Correlation Between Satcom Systems and One Software

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

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

Diversification Opportunities for Satcom Systems and One Software

0.86

Correlation Coefficient

Satcom Systems  One Software

Very poor diversification

The 3 months correlation between Satcom and One is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Satcom Systems and One Software Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Software Technologies and Satcom Systems 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 Satcom Systems are associated (or correlated) with One Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Software Technologies has no effect on the direction of Satcom Systems i.e., Satcom Systems and One Software go up and down completely randomly.

Pair Corralation between Satcom Systems and One Software

Assuming the 90 days trading horizon Satcom Systems is expected to generate 1.01 times less return on investment than One Software. In addition to that, Satcom Systems is 1.41 times more volatile than One Software Technologies. It trades about 0.21 of its total potential returns per unit of risk. One Software Technologies is currently generating about 0.3 per unit of volatility. If you would invest  498,718  in One Software Technologies on September 29, 2024 and sell it today you would earn a total of  179,382  from holding One Software Technologies or generate 35.97% return on investment over 90 days.

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

Satcom Systems  vs.  One Software Technologies

Satcom Systems

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satcom Systems are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Satcom Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

One Software Technologies

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in One Software Technologies are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, One Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Satcom Systems and One Software

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

The idea behind Satcom Systems and One Software 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.