Correlation Between EPlus and AudioEye

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

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

Diversification Opportunities for EPlus and AudioEye

0.79

Correlation Coefficient

EPlus  AudioEye

Poor diversification

The 3 months correlation between EPlus and AudioEye is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ePlus inc and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and EPlus 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 ePlus inc 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 EPlus i.e., EPlus and AudioEye go up and down completely randomly.

Pair Corralation between EPlus and AudioEye

Given the investment horizon of 90 days ePlus inc is expected to generate 0.49 times more return on investment than AudioEye. However, ePlus inc is 2.04 times less risky than AudioEye. It trades about -0.11 of its potential returns per unit of risk. AudioEye is currently generating about -0.09 per unit of risk. If you would invest  7,317  in ePlus inc on December 29, 2024 and sell it today you would lose (1,124) from holding ePlus inc or give up 15.36% of portfolio value over 90 days.

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

ePlus inc  vs.  AudioEye

ePlus inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AudioEye

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EPlus and AudioEye

The main advantage of trading using opposite EPlus and AudioEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPlus 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 ePlus inc 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.