Correlation Between VTEX and AudioEye
Can any of the company-specific risk be diversified away by investing in both VTEX and AudioEye 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 VTEX and AudioEye into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VTEX and AudioEye, you can compare the effects of market volatilities on VTEX and AudioEye 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 VTEX with a short position of AudioEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTEX and AudioEye.
Diversification Opportunities for VTEX and AudioEye
Very good diversification
The 3 months correlation between VTEX and AudioEye is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding VTEX and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and VTEX 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 VTEX are associated (or correlated) with AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of VTEX i.e., VTEX and AudioEye go up and down completely randomly.
Pair Corralation between VTEX and AudioEye
Given the investment horizon of 90 days VTEX is expected to under-perform the AudioEye. But the stock apears to be less risky and, when comparing its historical volatility, VTEX is 4.93 times less risky than AudioEye. The stock trades about -0.17 of its potential returns per unit of risk. The AudioEye is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,245 in AudioEye on August 28, 2024 and sell it today you would earn a total of 403.00 from holding AudioEye or generate 17.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VTEX vs. AudioEye
Performance |
| Timeline |
| VTEX |
| AudioEye |
VTEX and AudioEye Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VTEX and AudioEye
The main advantage of trading using opposite VTEX and AudioEye positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTEX position performs unexpectedly, AudioEye 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 AudioEye will offset losses from the drop in AudioEye's long position.The idea behind VTEX and AudioEye 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.Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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