Correlation Between AudioCodes and HP

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

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

Diversification Opportunities for AudioCodes and HP

0.24

Correlation Coefficient

AudioCodes  HP

Modest diversification

The 3 months correlation between AudioCodes and HP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and HP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HP 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 HP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HP Inc has no effect on the direction of AudioCodes i.e., AudioCodes and HP go up and down completely randomly.

Pair Corralation between AudioCodes and HP

Given the investment horizon of 90 days AudioCodes is expected to generate 1.55 times more return on investment than HP. However, AudioCodes is 1.55 times more volatile than HP Inc. It trades about 0.05 of its potential returns per unit of risk. HP Inc is currently generating about -0.11 per unit of risk. If you would invest  927.00  in AudioCodes on December 29, 2024 and sell it today you would earn a total of  53.00  from holding AudioCodes or generate 5.72% 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.  HP Inc

AudioCodes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 3 (%) 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.

HP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days HP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with AudioCodes and HP

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

The idea behind AudioCodes and HP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.