Correlation Between AudioCodes and Wegener

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

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

Diversification Opportunities for AudioCodes and Wegener

0.63

Correlation Coefficient

AudioCodes  Wegener

Poor diversification

The 3 months correlation between AudioCodes and Wegener is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Wegener in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wegener 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 Wegener. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wegener has no effect on the direction of AudioCodes i.e., AudioCodes and Wegener go up and down completely randomly.

Pair Corralation between AudioCodes and Wegener

If you would invest  972.00  in AudioCodes on October 27, 2024 and sell it today you would earn a total of  114.00  from holding AudioCodes or generate 11.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.33%
Values	Daily Returns

AudioCodes  vs.  Wegener

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.

Wegener

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wegener has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wegener 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 Wegener

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

The idea behind AudioCodes and Wegener 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.