Correlation Between Radware and Allot Communications

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

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

Diversification Opportunities for Radware and Allot Communications

0.52

Correlation Coefficient

Radware  Allot Communications

Very weak diversification

The 3 months correlation between Radware and Allot is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Radware and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications and Radware 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 Radware 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 Radware i.e., Radware and Allot Communications go up and down completely randomly.

Pair Corralation between Radware and Allot Communications

Given the investment horizon of 90 days Radware is expected to generate 2.88 times less return on investment than Allot Communications. But when comparing it to its historical volatility, Radware is 2.41 times less risky than Allot Communications. It trades about 0.08 of its potential returns per unit of risk. Allot Communications is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  588.00  in Allot Communications on May 4, 2025 and sell it today you would earn a total of  143.00  from holding Allot Communications or generate 24.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Radware  vs.  Allot Communications

Radware

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Radware may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Allot Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allot Communications are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal essential indicators, Allot Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Radware and Allot Communications

The main advantage of trading using opposite Radware and Allot Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radware 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 Radware 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..