Correlation Between Knightscope and AudioCodes

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

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

Diversification Opportunities for Knightscope and AudioCodes

-0.48

Correlation Coefficient

Knightscope  AudioCodes

Very good diversification

The 3 months correlation between Knightscope and AudioCodes is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Knightscope and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Knightscope 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 Knightscope 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 Knightscope i.e., Knightscope and AudioCodes go up and down completely randomly.

Pair Corralation between Knightscope and AudioCodes

Given the investment horizon of 90 days Knightscope is expected to generate 3.96 times more return on investment than AudioCodes. However, Knightscope is 3.96 times more volatile than AudioCodes. It trades about 0.1 of its potential returns per unit of risk. AudioCodes is currently generating about -0.07 per unit of risk. If you would invest  1,280  in Knightscope on August 30, 2024 and sell it today you would earn a total of  456.00  from holding Knightscope or generate 35.63% return on investment over 90 days.

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

Knightscope  vs.  AudioCodes

Knightscope

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Knightscope reported 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. 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 Knightscope and AudioCodes

The main advantage of trading using opposite Knightscope and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knightscope 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 Knightscope 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.