Correlation Between Aware and Avistar Communications

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

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

Diversification Opportunities for Aware and Avistar Communications

0.0

Correlation Coefficient

Aware  Avistar Communications

Pay attention - limited upside

The 3 months correlation between Aware and Avistar is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Avistar Communications Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avistar Communications and Aware 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 Aware Inc are associated (or correlated) with Avistar Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avistar Communications has no effect on the direction of Aware i.e., Aware and Avistar Communications go up and down completely randomly.

Pair Corralation between Aware and Avistar Communications

If you would invest  152.00  in Aware Inc on December 19, 2024 and sell it today you would earn a total of  18.00  from holding Aware Inc or generate 11.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aware Inc  vs.  Avistar Communications Corp

Aware Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aware Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Aware exhibited solid returns over the last few months and may actually be approaching a breakup point.

Avistar Communications

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Aware Inc and Avistar Communications Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.