Correlation Between AudioCodes and Akoustis Technologies

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

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

Diversification Opportunities for AudioCodes and Akoustis Technologies

0.61

Correlation Coefficient

AudioCodes  Akoustis Technologies

Poor diversification

The 3 months correlation between AudioCodes and Akoustis is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Akoustis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akoustis Technologies and AudioCodes 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 AudioCodes are associated (or correlated) with Akoustis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akoustis Technologies has no effect on the direction of AudioCodes i.e., AudioCodes and Akoustis Technologies go up and down completely randomly.

Pair Corralation between AudioCodes and Akoustis Technologies

Given the investment horizon of 90 days AudioCodes is expected to generate 0.46 times more return on investment than Akoustis Technologies. However, AudioCodes is 2.16 times less risky than Akoustis Technologies. It trades about -0.06 of its potential returns per unit of risk. Akoustis Technologies is currently generating about -0.1 per unit of risk. If you would invest  1,059  in AudioCodes on February 17, 2024 and sell it today you would lose (61.00) from holding AudioCodes or give up 5.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

AudioCodes  vs.  Akoustis Technologies

AudioCodes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AudioCodes 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 fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Akoustis Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akoustis Technologies 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 June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AudioCodes and Akoustis Technologies

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

The idea behind AudioCodes and Akoustis Technologies 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.