Correlation Between MidCap Financial and CEOTRONICS (CEKSG)

Can any of the company-specific risk be diversified away by investing in both MidCap Financial and CEOTRONICS (CEKSG) 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 MidCap Financial and CEOTRONICS (CEKSG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MidCap Financial Investment and CEOTRONICS, you can compare the effects of market volatilities on MidCap Financial and CEOTRONICS (CEKSG) 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 MidCap Financial with a short position of CEOTRONICS (CEKSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and CEOTRONICS (CEKSG).

Diversification Opportunities for MidCap Financial and CEOTRONICS (CEKSG)

0.63

Correlation Coefficient

MidCap Financial  CEOTRONICS (CEKSG)

Poor diversification

The 3 months correlation between MidCap and CEOTRONICS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS (CEKSG) and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with CEOTRONICS (CEKSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS (CEKSG) has no effect on the direction of MidCap Financial i.e., MidCap Financial and CEOTRONICS (CEKSG) go up and down completely randomly.

Pair Corralation between MidCap Financial and CEOTRONICS (CEKSG)

Assuming the 90 days trading horizon MidCap Financial Investment is expected to generate 0.42 times more return on investment than CEOTRONICS (CEKSG). However, MidCap Financial Investment is 2.38 times less risky than CEOTRONICS (CEKSG). It trades about -0.14 of its potential returns per unit of risk. CEOTRONICS is currently generating about -0.28 per unit of risk. If you would invest  1,314  in MidCap Financial Investment on October 9, 2024 and sell it today you would lose (37.00) from holding MidCap Financial Investment or give up 2.82% of portfolio value over 90 days.

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

MidCap Financial Investment  vs.  CEOTRONICS

MidCap Financial Inv

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MidCap Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with MidCap Financial and CEOTRONICS (CEKSG)

The main advantage of trading using opposite MidCap Financial and CEOTRONICS (CEKSG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MidCap Financial position performs unexpectedly, CEOTRONICS (CEKSG) 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 CEOTRONICS (CEKSG) will offset losses from the drop in CEOTRONICS (CEKSG)'s long position.

The idea behind MidCap Financial Investment and CEOTRONICS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.