Correlation Between VerifyMe and ADTRAN

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

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

Diversification Opportunities for VerifyMe and ADTRAN

0.21

Correlation Coefficient

VerifyMe  ADTRAN

Modest diversification

The 3 months correlation between VerifyMe and ADTRAN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding VerifyMe and ADTRAN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADTRAN Inc and VerifyMe 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 VerifyMe are associated (or correlated) with ADTRAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADTRAN Inc has no effect on the direction of VerifyMe i.e., VerifyMe and ADTRAN go up and down completely randomly.

Pair Corralation between VerifyMe and ADTRAN

Given the investment horizon of 90 days VerifyMe is expected to generate 4.83 times more return on investment than ADTRAN. However, VerifyMe is 4.83 times more volatile than ADTRAN Inc. It trades about 0.05 of its potential returns per unit of risk. ADTRAN Inc is currently generating about 0.05 per unit of risk. If you would invest  79.00  in VerifyMe on December 30, 2024 and sell it today you would lose (12.00) from holding VerifyMe or give up 15.19% of portfolio value over 90 days.

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

VerifyMe  vs.  ADTRAN Inc

VerifyMe

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VerifyMe are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, VerifyMe exhibited solid returns over the last few months and may actually be approaching a breakup point.

ADTRAN Inc

Risk-Adjusted Performance

Insignificant

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

Pair Trading with VerifyMe and ADTRAN

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

The idea behind VerifyMe and ADTRAN Inc 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.