Correlation Between AuthID and Evertec

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

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

Diversification Opportunities for AuthID and Evertec

-0.05

Correlation Coefficient

AuthID  Evertec

Good diversification

The 3 months correlation between AuthID and Evertec is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding authID Inc and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec 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 Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of AuthID i.e., AuthID and Evertec go up and down completely randomly.

Pair Corralation between AuthID and Evertec

Given the investment horizon of 90 days authID Inc is expected to generate 5.49 times more return on investment than Evertec. However, AuthID is 5.49 times more volatile than Evertec. It trades about -0.01 of its potential returns per unit of risk. Evertec is currently generating about -0.11 per unit of risk. If you would invest  603.00  in authID Inc on November 27, 2024 and sell it today you would lose (101.00) from holding authID Inc or give up 16.75% of portfolio value over 90 days.

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

authID Inc  vs.  Evertec

authID Inc

Risk-Adjusted Performance

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.

Evertec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evertec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with AuthID and Evertec

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

The idea behind authID Inc and Evertec 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.