Correlation Between Wegener and AudioCodes

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

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

Diversification Opportunities for Wegener and AudioCodes

0.63

Correlation Coefficient

Wegener  AudioCodes

Poor diversification

The 3 months correlation between Wegener and AudioCodes is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Wegener and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Wegener 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 Wegener 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 Wegener i.e., Wegener and AudioCodes go up and down completely randomly.

Pair Corralation between Wegener and AudioCodes

If you would invest  956.00  in AudioCodes on October 27, 2024 and sell it today you would earn a total of  130.00  from holding AudioCodes or generate 13.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.67%
Values	Daily Returns

Wegener  vs.  AudioCodes

Wegener

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wegener has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Wegener is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

AudioCodes

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, AudioCodes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wegener and AudioCodes

The main advantage of trading using opposite Wegener and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wegener 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 Wegener 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.