Correlation Between Danavation Technologies and AudioEye

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

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

Diversification Opportunities for Danavation Technologies and AudioEye

-0.14

Correlation Coefficient

Danavation Technologies  AudioEye

Good diversification

The 3 months correlation between Danavation and AudioEye is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Danavation Technologies Corp and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and Danavation Technologies 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 Danavation Technologies Corp are associated (or correlated) with AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of Danavation Technologies i.e., Danavation Technologies and AudioEye go up and down completely randomly.

Pair Corralation between Danavation Technologies and AudioEye

Assuming the 90 days horizon Danavation Technologies Corp is expected to generate 15.83 times more return on investment than AudioEye. However, Danavation Technologies is 15.83 times more volatile than AudioEye. It trades about 0.22 of its potential returns per unit of risk. AudioEye is currently generating about -0.22 per unit of risk. If you would invest  0.05  in Danavation Technologies Corp on October 13, 2024 and sell it today you would earn a total of  0.15  from holding Danavation Technologies Corp or generate 300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Danavation Technologies Corp  vs.  AudioEye

Danavation Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Danavation Technologies Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Danavation Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

AudioEye

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AudioEye has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Danavation Technologies and AudioEye

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

The idea behind Danavation Technologies Corp and AudioEye 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.