Correlation Between CeoTronics and HOYA

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

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

Diversification Opportunities for CeoTronics and HOYA

0.07

Correlation Coefficient

CeoTronics  HOYA

Significant diversification

The 3 months correlation between CeoTronics and HOYA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA and CeoTronics 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 AG are associated (or correlated) with HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of CeoTronics i.e., CeoTronics and HOYA go up and down completely randomly.

Pair Corralation between CeoTronics and HOYA

Assuming the 90 days trading horizon CeoTronics is expected to generate 2.93 times less return on investment than HOYA. In addition to that, CeoTronics is 1.07 times more volatile than HOYA Corporation. It trades about 0.04 of its total potential returns per unit of risk. HOYA Corporation is currently generating about 0.12 per unit of volatility. If you would invest  12,280  in HOYA Corporation on October 16, 2024 and sell it today you would earn a total of  345.00  from holding HOYA Corporation or generate 2.81% return on investment over 90 days.

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

CeoTronics AG  vs.  HOYA Corp.

CeoTronics AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CeoTronics AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, CeoTronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

HOYA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, HOYA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CeoTronics and HOYA

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

The idea behind CeoTronics AG and HOYA Corporation 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.