Correlation Between Intel and AudioCodes

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

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

Diversification Opportunities for Intel and AudioCodes

-0.69

Correlation Coefficient

Intel  AudioCodes

Excellent diversification

The 3 months correlation between Intel and AudioCodes is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Intel and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Intel 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 Intel 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 Intel i.e., Intel and AudioCodes go up and down completely randomly.

Pair Corralation between Intel and AudioCodes

Given the investment horizon of 90 days Intel is expected to generate 0.99 times more return on investment than AudioCodes. However, Intel is 1.01 times less risky than AudioCodes. It trades about 0.05 of its potential returns per unit of risk. AudioCodes is currently generating about -0.07 per unit of risk. If you would invest  2,204  in Intel on August 30, 2024 and sell it today you would earn a total of  161.00  from holding Intel or generate 7.3% return on investment over 90 days.

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

Intel  vs.  AudioCodes

Intel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Intel may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 abnormal performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Intel and AudioCodes

The main advantage of trading using opposite Intel and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intel 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 Intel 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.