Correlation Between Celestica and Neonode

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

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

Diversification Opportunities for Celestica and Neonode

-0.56

Correlation Coefficient

Celestica  Neonode

Excellent diversification

The 3 months correlation between Celestica and Neonode is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode and Celestica 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 Celestica are associated (or correlated) with Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of Celestica i.e., Celestica and Neonode go up and down completely randomly.

Pair Corralation between Celestica and Neonode

Considering the 90-day investment horizon Celestica is expected to generate 2.56 times less return on investment than Neonode. But when comparing it to its historical volatility, Celestica is 1.88 times less risky than Neonode. It trades about 0.11 of its potential returns per unit of risk. Neonode is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  670.00  in Neonode on September 12, 2024 and sell it today you would earn a total of  107.00  from holding Neonode or generate 15.97% return on investment over 90 days.

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

Celestica  vs.  Neonode

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Neonode

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neonode are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Neonode displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celestica and Neonode

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

The idea behind Celestica and Neonode 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.