Correlation Between Aware and Altigen Communications

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Can any of the company-specific risk be diversified away by investing in both Aware and Altigen Communications 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 Aware and Altigen Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aware Inc and Altigen Communications, you can compare the effects of market volatilities on Aware and Altigen Communications 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 Aware with a short position of Altigen Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aware and Altigen Communications.

Diversification Opportunities for Aware and Altigen Communications

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Aware and Altigen is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Altigen Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altigen Communications and Aware 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 Aware Inc are associated (or correlated) with Altigen Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altigen Communications has no effect on the direction of Aware i.e., Aware and Altigen Communications go up and down completely randomly.

Pair Corralation between Aware and Altigen Communications

Given the investment horizon of 90 days Aware Inc is expected to generate 0.63 times more return on investment than Altigen Communications. However, Aware Inc is 1.59 times less risky than Altigen Communications. It trades about 0.02 of its potential returns per unit of risk. Altigen Communications is currently generating about -0.18 per unit of risk. If you would invest  176.00  in Aware Inc on September 6, 2024 and sell it today you would lose (10.00) from holding Aware Inc or give up 5.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy3.99%
ValuesDaily Returns

Aware Inc  vs.  Altigen Communications

 Performance 
       Timeline  
Aware Inc 

Risk-Adjusted Performance

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Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Altigen Communications 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

Aware and Altigen Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aware and Altigen Communications

The main advantage of trading using opposite Aware and Altigen Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aware position performs unexpectedly, Altigen Communications 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 Altigen Communications will offset losses from the drop in Altigen Communications' long position.
The idea behind Aware Inc and Altigen Communications 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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