Correlation Between Aviat Networks and Rimini Street

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

By analyzing existing cross correlation between Aviat Networks and Rimini Street, you can compare the effects of market volatilities on Aviat Networks and Rimini Street 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 Aviat Networks with a short position of Rimini Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aviat Networks and Rimini Street.

Diversification Opportunities for Aviat Networks and Rimini Street

-0.64

Correlation Coefficient

Aviat Networks  Rimini Street

Excellent diversification

The 3 months correlation between Aviat and Rimini is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Aviat Networks and Rimini Street in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rimini Street and Aviat Networks 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 Aviat Networks are associated (or correlated) with Rimini Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rimini Street has no effect on the direction of Aviat Networks i.e., Aviat Networks and Rimini Street go up and down completely randomly.

Pair Corralation between Aviat Networks and Rimini Street

Given the investment horizon of 90 days Aviat Networks is expected to under-perform the Rimini Street. In addition to that, Aviat Networks is 1.67 times more volatile than Rimini Street. It trades about -0.11 of its total potential returns per unit of risk. Rimini Street is currently generating about 0.12 per unit of volatility. If you would invest  173.00  in Rimini Street on September 3, 2024 and sell it today you would earn a total of  43.00  from holding Rimini Street or generate 24.86% return on investment over 90 days.

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

Aviat Networks  vs.  Rimini Street

Aviat Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aviat Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Rimini Street

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rimini Street are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Rimini Street demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aviat Networks and Rimini Street

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

The idea behind Aviat Networks and Rimini Street 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.