Correlation Between Cameo Communications and Chicony Power

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

By analyzing existing cross correlation between Cameo Communications and Chicony Power Technology, you can compare the effects of market volatilities on Cameo Communications and Chicony Power 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 Chicony Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Chicony Power.

Diversification Opportunities for Cameo Communications and Chicony Power

0.02

Correlation Coefficient

Cameo Communications  Chicony Power

Significant diversification

The 3 months correlation between Cameo and Chicony is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Chicony Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Power Technology 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 Chicony Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Power Technology has no effect on the direction of Cameo Communications i.e., Cameo Communications and Chicony Power go up and down completely randomly.

Pair Corralation between Cameo Communications and Chicony Power

Assuming the 90 days trading horizon Cameo Communications is expected to under-perform the Chicony Power. In addition to that, Cameo Communications is 1.97 times more volatile than Chicony Power Technology. It trades about -0.04 of its total potential returns per unit of risk. Chicony Power Technology is currently generating about -0.01 per unit of volatility. If you would invest  12,750  in Chicony Power Technology on October 24, 2024 and sell it today you would lose (300.00) from holding Chicony Power Technology or give up 2.35% of portfolio value over 90 days.

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

Cameo Communications  vs.  Chicony Power Technology

Cameo Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cameo Communications 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.

Chicony Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cameo Communications and Chicony Power

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

The idea behind Cameo Communications and Chicony Power Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.