Correlation Between CELLULAR GOODS and SERI INDUSTRIAL

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

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

Diversification Opportunities for CELLULAR GOODS and SERI INDUSTRIAL

-0.29

Correlation Coefficient

CELLULAR GOODS  SERI INDUSTRIAL

Very good diversification

The 3 months correlation between CELLULAR and SERI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CELLULAR GOODS LS and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO and CELLULAR GOODS 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 CELLULAR GOODS LS are associated (or correlated) with SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of CELLULAR GOODS i.e., CELLULAR GOODS and SERI INDUSTRIAL go up and down completely randomly.

Pair Corralation between CELLULAR GOODS and SERI INDUSTRIAL

Assuming the 90 days horizon CELLULAR GOODS LS is expected to generate 28.85 times more return on investment than SERI INDUSTRIAL. However, CELLULAR GOODS is 28.85 times more volatile than SERI INDUSTRIAL EO. It trades about 0.3 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about -0.02 per unit of risk. If you would invest  0.05  in CELLULAR GOODS LS on October 22, 2024 and sell it today you would earn a total of  0.20  from holding CELLULAR GOODS LS or generate 400.0% return on investment over 90 days.

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

CELLULAR GOODS LS  vs.  SERI INDUSTRIAL EO

CELLULAR GOODS LS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CELLULAR GOODS LS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CELLULAR GOODS reported solid returns over the last few months and may actually be approaching a breakup point.

SERI INDUSTRIAL EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SERI INDUSTRIAL EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CELLULAR GOODS and SERI INDUSTRIAL

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

The idea behind CELLULAR GOODS LS and SERI INDUSTRIAL EO 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.