Correlation Between AudioEye and EGain

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

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

Diversification Opportunities for AudioEye and EGain

0.77

Correlation Coefficient

AudioEye  EGain

Poor diversification

The 3 months correlation between AudioEye and EGain is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AudioEye and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain and AudioEye 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 AudioEye are associated (or correlated) with EGain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGain has no effect on the direction of AudioEye i.e., AudioEye and EGain go up and down completely randomly.

Pair Corralation between AudioEye and EGain

Given the investment horizon of 90 days AudioEye is expected to under-perform the EGain. In addition to that, AudioEye is 1.4 times more volatile than eGain. It trades about -0.09 of its total potential returns per unit of risk. eGain is currently generating about -0.07 per unit of volatility. If you would invest  587.00  in eGain on December 29, 2024 and sell it today you would lose (93.00) from holding eGain or give up 15.84% of portfolio value over 90 days.

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

AudioEye  vs.  eGain

AudioEye

Risk-Adjusted Performance

Very Weak

Over the last 90 days AudioEye has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

eGain

Risk-Adjusted Performance

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AudioEye and EGain

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

The idea behind AudioEye and eGain 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.