Correlation Between AudioCodes and Avistar Communications

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

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

Diversification Opportunities for AudioCodes and Avistar Communications

0.0

Correlation Coefficient

AudioCodes  Avistar Communications

Pay attention - limited upside

The 3 months correlation between AudioCodes and Avistar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Avistar Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avistar Communications and AudioCodes 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 AudioCodes are associated (or correlated) with Avistar Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avistar Communications has no effect on the direction of AudioCodes i.e., AudioCodes and Avistar Communications go up and down completely randomly.

Pair Corralation between AudioCodes and Avistar Communications

If you would invest  954.00  in AudioCodes on October 27, 2024 and sell it today you would earn a total of  132.00  from holding AudioCodes or generate 13.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

AudioCodes  vs.  Avistar Communications Corp

AudioCodes

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, AudioCodes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Avistar Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avistar Communications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Avistar Communications is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with AudioCodes and Avistar Communications

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

The idea behind AudioCodes and Avistar Communications 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.