Correlation Between Cameo Communications and Level Biotechnology

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

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

Diversification Opportunities for Cameo Communications and Level Biotechnology

-0.52

Correlation Coefficient

Cameo Communications  Level Biotechnology

Excellent diversification

The 3 months correlation between Cameo and Level is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Level Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Level Biotechnology and Cameo Communications 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 Cameo Communications are associated (or correlated) with Level Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Level Biotechnology has no effect on the direction of Cameo Communications i.e., Cameo Communications and Level Biotechnology go up and down completely randomly.

Pair Corralation between Cameo Communications and Level Biotechnology

Assuming the 90 days trading horizon Cameo Communications is expected to generate 2.5 times more return on investment than Level Biotechnology. However, Cameo Communications is 2.5 times more volatile than Level Biotechnology. It trades about 0.03 of its potential returns per unit of risk. Level Biotechnology is currently generating about 0.05 per unit of risk. If you would invest  1,020  in Cameo Communications on September 26, 2024 and sell it today you would earn a total of  280.00  from holding Cameo Communications or generate 27.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Cameo Communications  vs.  Level Biotechnology

Cameo Communications

Risk-Adjusted Performance

5 of 100

Insignificant

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

Level Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Level Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Level Biotechnology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cameo Communications and Level Biotechnology

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

The idea behind Cameo Communications and Level Biotechnology 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.