Correlation Between AuthID and Allot Communications

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

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

Diversification Opportunities for AuthID and Allot Communications

-0.45

Correlation Coefficient

AuthID  Allot Communications

Very good diversification

The 3 months correlation between AuthID and Allot is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding authID Inc and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications and AuthID 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 authID Inc are associated (or correlated) with Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of AuthID i.e., AuthID and Allot Communications go up and down completely randomly.

Pair Corralation between AuthID and Allot Communications

Given the investment horizon of 90 days AuthID is expected to generate 33.78 times less return on investment than Allot Communications. In addition to that, AuthID is 1.67 times more volatile than Allot Communications. It trades about 0.01 of its total potential returns per unit of risk. Allot Communications is currently generating about 0.31 per unit of volatility. If you would invest  290.00  in Allot Communications on October 5, 2024 and sell it today you would earn a total of  329.00  from holding Allot Communications or generate 113.45% return on investment over 90 days.

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

authID Inc  vs.  Allot Communications

authID Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days authID Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, AuthID is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Allot Communications

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Allot Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AuthID and Allot Communications

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

The idea behind authID Inc and Allot Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.