Correlation Between Ezenia and Actelis Networks

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

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

Diversification Opportunities for Ezenia and Actelis Networks

0.67

Correlation Coefficient

Ezenia  Actelis Networks

Poor diversification

The 3 months correlation between Ezenia and Actelis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ezenia Inc and Actelis Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actelis Networks and Ezenia 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 Ezenia Inc are associated (or correlated) with Actelis Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actelis Networks has no effect on the direction of Ezenia i.e., Ezenia and Actelis Networks go up and down completely randomly.

Pair Corralation between Ezenia and Actelis Networks

Given the investment horizon of 90 days Ezenia is expected to generate 4.69 times less return on investment than Actelis Networks. But when comparing it to its historical volatility, Ezenia Inc is 34.14 times less risky than Actelis Networks. It trades about 0.26 of its potential returns per unit of risk. Actelis Networks is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  503.00  in Actelis Networks on October 11, 2024 and sell it today you would lose (363.00) from holding Actelis Networks or give up 72.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	3.02%
Values	Daily Returns

Ezenia Inc  vs.  Actelis Networks

Ezenia Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ezenia Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Ezenia is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Actelis Networks

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Actelis Networks are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Actelis Networks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ezenia and Actelis Networks

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

The idea behind Ezenia Inc and Actelis Networks 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.