Correlation Between Silicom and AudioCodes

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

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

Diversification Opportunities for Silicom and AudioCodes

0.44

Correlation Coefficient

Silicom  AudioCodes

Very weak diversification

The 3 months correlation between Silicom and AudioCodes is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Silicom and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes and Silicom 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 Silicom 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 Silicom i.e., Silicom and AudioCodes go up and down completely randomly.

Pair Corralation between Silicom and AudioCodes

Given the investment horizon of 90 days Silicom is expected to generate 1.67 times less return on investment than AudioCodes. But when comparing it to its historical volatility, Silicom is 1.09 times less risky than AudioCodes. It trades about 0.05 of its potential returns per unit of risk. AudioCodes is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  871.00  in AudioCodes on May 19, 2025 and sell it today you would earn a total of  109.00  from holding AudioCodes or generate 12.51% return on investment over 90 days.

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

Silicom  vs.  AudioCodes

Silicom

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Silicom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Silicom may actually be approaching a critical reversion point that can send shares even higher in September 2025.

AudioCodes

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in AudioCodes are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, AudioCodes exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Silicom and AudioCodes

The main advantage of trading using opposite Silicom and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silicom 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 Silicom 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.