Correlation Between Analog Devices and Celestica

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

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

Diversification Opportunities for Analog Devices and Celestica

0.03

Correlation Coefficient

Analog Devices  Celestica

Significant diversification

The 3 months correlation between Analog and Celestica is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Analog Devices and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Analog Devices 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 Analog Devices are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Analog Devices i.e., Analog Devices and Celestica go up and down completely randomly.

Pair Corralation between Analog Devices and Celestica

Considering the 90-day investment horizon Analog Devices is expected to generate 2.28 times less return on investment than Celestica. But when comparing it to its historical volatility, Analog Devices is 2.72 times less risky than Celestica. It trades about 0.02 of its potential returns per unit of risk. Celestica is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,305  in Celestica on December 19, 2024 and sell it today you would lose (558.00) from holding Celestica or give up 6.0% of portfolio value over 90 days.

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

Analog Devices  vs.  Celestica

Analog Devices

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Analog Devices are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Analog Devices is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Celestica

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Celestica is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Analog Devices and Celestica

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

The idea behind Analog Devices and Celestica 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.

Check out your portfolio center.

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.