Correlation Between Oron Group and Allot Communications

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

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

Diversification Opportunities for Oron Group and Allot Communications

0.84

Correlation Coefficient

Oron Group  Allot Communications

Very poor diversification

The 3 months correlation between Oron and Allot is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Oron Group Investments and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications and Oron Group 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 Oron Group Investments are associated (or correlated) with Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of Oron Group i.e., Oron Group and Allot Communications go up and down completely randomly.

Pair Corralation between Oron Group and Allot Communications

Assuming the 90 days trading horizon Oron Group is expected to generate 1.61 times less return on investment than Allot Communications. But when comparing it to its historical volatility, Oron Group Investments is 1.74 times less risky than Allot Communications. It trades about 0.07 of its potential returns per unit of risk. Allot Communications is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  108,400  in Allot Communications on September 30, 2024 and sell it today you would earn a total of  83,600  from holding Allot Communications or generate 77.12% return on investment over 90 days.

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

Oron Group Investments  vs.  Allot Communications

Oron Group Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Allot Communications

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Allot Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oron Group and Allot Communications

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

The idea behind Oron Group Investments and Allot 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.