Correlation Between OneSpan and Allot Communications

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

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

Diversification Opportunities for OneSpan and Allot Communications

0.67

Correlation Coefficient

OneSpan  Allot Communications

Poor diversification

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

Pair Corralation between OneSpan and Allot Communications

Given the investment horizon of 90 days OneSpan is expected to under-perform the Allot Communications. But the stock apears to be less risky and, when comparing its historical volatility, OneSpan is 2.25 times less risky than Allot Communications. The stock trades about -0.1 of its potential returns per unit of risk. The Allot Communications is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Allot Communications on December 28, 2024 and sell it today you would lose (16.00) from holding Allot Communications or give up 2.58% of portfolio value over 90 days.

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

OneSpan  vs.  Allot Communications

OneSpan

Risk-Adjusted Performance

Very Weak

Over the last 90 days OneSpan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Allot Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting essential indicators, Allot Communications may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with OneSpan and Allot Communications

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

The idea behind OneSpan and Allot Communications 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.