Correlation Between AudioCodes and Aware

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

By analyzing existing cross correlation between AudioCodes and Aware Inc, you can compare the effects of market volatilities on AudioCodes and Aware 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 Aware. Check out your portfolio center. Please also check ongoing floating volatility patterns of AudioCodes and Aware.

Diversification Opportunities for AudioCodes and Aware

0.33

Correlation Coefficient

AudioCodes  Aware

Weak diversification

The 3 months correlation between AudioCodes and Aware is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Aware Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aware Inc 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 Aware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aware Inc has no effect on the direction of AudioCodes i.e., AudioCodes and Aware go up and down completely randomly.

Pair Corralation between AudioCodes and Aware

Given the investment horizon of 90 days AudioCodes is expected to generate 1.8 times less return on investment than Aware. But when comparing it to its historical volatility, AudioCodes is 1.9 times less risky than Aware. It trades about 0.07 of its potential returns per unit of risk. Aware Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Aware Inc on December 20, 2024 and sell it today you would earn a total of  18.00  from holding Aware Inc or generate 11.76% return on investment over 90 days.

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

AudioCodes  vs.  Aware Inc

AudioCodes

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, AudioCodes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aware Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aware Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aware exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AudioCodes and Aware

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

The idea behind AudioCodes and Aware Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.