Correlation Between C Mer and AudioCodes

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

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

Diversification Opportunities for C Mer and AudioCodes

-0.72

Correlation Coefficient

C Mer  AudioCodes

Pay attention - limited upside

The 3 months correlation between CMER and AudioCodes is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding C Mer Industries and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and C Mer 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 C Mer Industries 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 C Mer i.e., C Mer and AudioCodes go up and down completely randomly.

Pair Corralation between C Mer and AudioCodes

Assuming the 90 days trading horizon C Mer Industries is expected to generate 1.46 times more return on investment than AudioCodes. However, C Mer is 1.46 times more volatile than AudioCodes. It trades about 0.24 of its potential returns per unit of risk. AudioCodes is currently generating about -0.05 per unit of risk. If you would invest  171,900  in C Mer Industries on September 16, 2024 and sell it today you would earn a total of  94,100  from holding C Mer Industries or generate 54.74% return on investment over 90 days.

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

C Mer Industries  vs.  AudioCodes

C Mer Industries

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in C Mer Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, C Mer sustained solid returns over the last few months and may actually be approaching a breakup point.

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. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with C Mer and AudioCodes

The main advantage of trading using opposite C Mer and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Mer 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 C Mer Industries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.