Correlation Between AudioCodes and Methode Electronics

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

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

Diversification Opportunities for AudioCodes and Methode Electronics

0.74

Correlation Coefficient

AudioCodes  Methode Electronics

Poor diversification

The 3 months correlation between AudioCodes and Methode is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AudioCodes and Methode Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Methode Electronics and AudioCodes 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 AudioCodes are associated (or correlated) with Methode Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Methode Electronics has no effect on the direction of AudioCodes i.e., AudioCodes and Methode Electronics go up and down completely randomly.

Pair Corralation between AudioCodes and Methode Electronics

Given the investment horizon of 90 days AudioCodes is expected to generate 0.66 times more return on investment than Methode Electronics. However, AudioCodes is 1.52 times less risky than Methode Electronics. It trades about -0.04 of its potential returns per unit of risk. Methode Electronics is currently generating about -0.03 per unit of risk. If you would invest  930.00  in AudioCodes on August 26, 2025 and sell it today you would lose (63.00) from holding AudioCodes or give up 6.77% of portfolio value over 90 days.

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

AudioCodes  vs.  Methode Electronics

AudioCodes

Risk-Adjusted Performance

Weakest

Over the last 90 days AudioCodes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, AudioCodes is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Methode Electronics

Risk-Adjusted Performance

Weakest

Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Methode Electronics is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AudioCodes and Methode Electronics

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

The idea behind AudioCodes and Methode Electronics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.