Correlation Between Altigen Communications and Cable One

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

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

Diversification Opportunities for Altigen Communications and Cable One

0.12

Correlation Coefficient

Altigen Communications  Cable One

Average diversification

The 3 months correlation between Altigen and Cable is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Altigen Communications and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Altigen Communications 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 Altigen Communications are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Altigen Communications i.e., Altigen Communications and Cable One go up and down completely randomly.

Pair Corralation between Altigen Communications and Cable One

If you would invest  34,434  in Cable One on October 1, 2024 and sell it today you would earn a total of  2,623  from holding Cable One or generate 7.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Altigen Communications  vs.  Cable One

Altigen Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altigen Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Altigen Communications is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Cable One

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting fundamental drivers, Cable One may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Altigen Communications and Cable One

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

The idea behind Altigen Communications and Cable One 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.