Correlation Between CEOTRONICS (CEKSG) and DENSO CORP

Can any of the company-specific risk be diversified away by investing in both CEOTRONICS (CEKSG) and DENSO CORP 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 CEOTRONICS (CEKSG) and DENSO CORP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CEOTRONICS and DENSO P ADR, you can compare the effects of market volatilities on CEOTRONICS (CEKSG) and DENSO CORP 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 CEOTRONICS (CEKSG) with a short position of DENSO CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEOTRONICS (CEKSG) and DENSO CORP.

Diversification Opportunities for CEOTRONICS (CEKSG) and DENSO CORP

0.16

Correlation Coefficient

CEOTRONICS (CEKSG)  DENSO CORP

Average diversification

The 3 months correlation between CEOTRONICS and DENSO is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CEOTRONICS and DENSO P ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DENSO P ADR and CEOTRONICS (CEKSG) 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 CEOTRONICS are associated (or correlated) with DENSO CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DENSO P ADR has no effect on the direction of CEOTRONICS (CEKSG) i.e., CEOTRONICS (CEKSG) and DENSO CORP go up and down completely randomly.

Pair Corralation between CEOTRONICS (CEKSG) and DENSO CORP

Assuming the 90 days trading horizon CEOTRONICS is expected to generate 1.92 times more return on investment than DENSO CORP. However, CEOTRONICS (CEKSG) is 1.92 times more volatile than DENSO P ADR. It trades about 0.04 of its potential returns per unit of risk. DENSO P ADR is currently generating about 0.05 per unit of risk. If you would invest  554.00  in CEOTRONICS on October 8, 2024 and sell it today you would earn a total of  26.00  from holding CEOTRONICS or generate 4.69% return on investment over 90 days.

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

CEOTRONICS  vs.  DENSO P ADR

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS (CEKSG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

DENSO P ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DENSO P ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DENSO CORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CEOTRONICS (CEKSG) and DENSO CORP

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

The idea behind CEOTRONICS and DENSO P ADR 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.