Correlation Between Cadence Design and Hybrid Kinetic

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

By analyzing existing cross correlation between Cadence Design Systems and Hybrid Kinetic Group, you can compare the effects of market volatilities on Cadence Design and Hybrid Kinetic 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 Cadence Design with a short position of Hybrid Kinetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and Hybrid Kinetic.

Diversification Opportunities for Cadence Design and Hybrid Kinetic

0.0

Correlation Coefficient

Cadence Design  Hybrid Kinetic

Pay attention - limited upside

The 3 months correlation between Cadence and Hybrid is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and Hybrid Kinetic Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hybrid Kinetic Group and Cadence Design 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 Cadence Design Systems are associated (or correlated) with Hybrid Kinetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hybrid Kinetic Group has no effect on the direction of Cadence Design i.e., Cadence Design and Hybrid Kinetic go up and down completely randomly.

Pair Corralation between Cadence Design and Hybrid Kinetic

If you would invest  25,315  in Cadence Design Systems on October 20, 2024 and sell it today you would earn a total of  5,245  from holding Cadence Design Systems or generate 20.72% return on investment over 90 days.

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

Cadence Design Systems  vs.  Hybrid Kinetic Group

Cadence Design Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hybrid Kinetic Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hybrid Kinetic Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hybrid Kinetic is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cadence Design and Hybrid Kinetic

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

The idea behind Cadence Design Systems and Hybrid Kinetic Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..