Correlation Between AudioCodes and Ubiquiti Networks

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

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

Diversification Opportunities for AudioCodes and Ubiquiti Networks

0.17

Correlation Coefficient

AudioCodes  Ubiquiti Networks

Average diversification

The 3 months correlation between AudioCodes and Ubiquiti is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks 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 Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of AudioCodes i.e., AudioCodes and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between AudioCodes and Ubiquiti Networks

Given the investment horizon of 90 days AudioCodes is expected to generate 0.77 times more return on investment than Ubiquiti Networks. However, AudioCodes is 1.3 times less risky than Ubiquiti Networks. It trades about 0.03 of its potential returns per unit of risk. Ubiquiti Networks is currently generating about -0.02 per unit of risk. If you would invest  927.00  in AudioCodes on December 30, 2024 and sell it today you would earn a total of  28.00  from holding AudioCodes or generate 3.02% return on investment over 90 days.

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

AudioCodes  vs.  Ubiquiti Networks

AudioCodes

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AudioCodes is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ubiquiti Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ubiquiti Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Ubiquiti Networks is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AudioCodes and Ubiquiti Networks

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

The idea behind AudioCodes and Ubiquiti Networks 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.