Correlation Between Veeco Instruments and AudioCodes

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

Diversification Opportunities for Veeco Instruments and AudioCodes

VeecoAudioCodesDiversified AwayVeecoAudioCodesDiversified Away100%
-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Veeco and AudioCodes is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments i.e., Veeco Instruments and AudioCodes go up and down completely randomly.

Pair Corralation between Veeco Instruments and AudioCodes

Given the investment horizon of 90 days Veeco Instruments is expected to under-perform the AudioCodes. But the stock apears to be less risky and, when comparing its historical volatility, Veeco Instruments is 1.35 times less risky than AudioCodes. The stock trades about -0.02 of its potential returns per unit of risk. The AudioCodes is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,037  in AudioCodes on November 27, 2024 and sell it today you would earn a total of  96.00  from holding AudioCodes or generate 9.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.24%
ValuesDaily Returns

Veeco Instruments  vs.  AudioCodes

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -1001020304050
JavaScript chart by amCharts 3.21.15VECO AUDC
       Timeline  
Veeco Instruments 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Veeco Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2324252627282930
AudioCodes 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, AudioCodes exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb99.51010.51111.51212.5

Veeco Instruments and AudioCodes Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.87-2.9-1.93-0.96-0.01550.91.832.763.74.63 0.0450.0500.0550.0600.0650.070
JavaScript chart by amCharts 3.21.15VECO AUDC
       Returns  

Pair Trading with Veeco Instruments and AudioCodes

The main advantage of trading using opposite Veeco Instruments and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments 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 Veeco Instruments 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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