Correlation Between Mobiletron Electronics and Cameo Communications

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

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

Diversification Opportunities for Mobiletron Electronics and Cameo Communications

0.24

Correlation Coefficient

Mobiletron Electronics  Cameo Communications

Modest diversification

The 3 months correlation between Mobiletron and Cameo is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mobiletron Electronics Co and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications and Mobiletron Electronics 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 Mobiletron Electronics Co are associated (or correlated) with Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Mobiletron Electronics i.e., Mobiletron Electronics and Cameo Communications go up and down completely randomly.

Pair Corralation between Mobiletron Electronics and Cameo Communications

Assuming the 90 days trading horizon Mobiletron Electronics Co is expected to under-perform the Cameo Communications. But the stock apears to be less risky and, when comparing its historical volatility, Mobiletron Electronics Co is 2.31 times less risky than Cameo Communications. The stock trades about -0.36 of its potential returns per unit of risk. The Cameo Communications is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Cameo Communications on September 24, 2024 and sell it today you would earn a total of  70.00  from holding Cameo Communications or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Mobiletron Electronics Co  vs.  Cameo Communications

Mobiletron Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobiletron Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cameo Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobiletron Electronics and Cameo Communications

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

The idea behind Mobiletron Electronics Co and Cameo 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.