Correlation Between KVH Industries and AudioCodes

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

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

Diversification Opportunities for KVH Industries and AudioCodes

0.56

Correlation Coefficient

KVH Industries  AudioCodes

Very weak diversification

The 3 months correlation between KVH and AudioCodes is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding KVH Industries and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and KVH Industries 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 KVH Industries are associated (or correlated) with AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of KVH Industries i.e., KVH Industries and AudioCodes go up and down completely randomly.

Pair Corralation between KVH Industries and AudioCodes

Given the investment horizon of 90 days KVH Industries is expected to under-perform the AudioCodes. In addition to that, KVH Industries is 1.01 times more volatile than AudioCodes. It trades about -0.01 of its total potential returns per unit of risk. AudioCodes is currently generating about 0.05 per unit of volatility. If you would invest  927.00  in AudioCodes on December 29, 2024 and sell it today you would earn a total of  53.00  from holding AudioCodes or generate 5.72% return on investment over 90 days.

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

KVH Industries  vs.  AudioCodes

KVH Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days KVH Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, KVH Industries is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

AudioCodes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, AudioCodes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with KVH Industries and AudioCodes

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

The idea behind KVH Industries and AudioCodes 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.