Correlation Between Celestica and CARPENTER

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Can any of the company-specific risk be diversified away by investing in both Celestica and CARPENTER 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 CARPENTER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celestica and CARPENTER TECHNOLOGY P, you can compare the effects of market volatilities on Celestica and CARPENTER 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 CARPENTER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and CARPENTER.

Diversification Opportunities for Celestica and CARPENTER

-0.13
  Correlation Coefficient

Good diversification

The 3 months correlation between Celestica and CARPENTER is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and CARPENTER TECHNOLOGY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARPENTER TECHNOLOGY 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 CARPENTER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARPENTER TECHNOLOGY has no effect on the direction of Celestica i.e., Celestica and CARPENTER go up and down completely randomly.

Pair Corralation between Celestica and CARPENTER

Considering the 90-day investment horizon Celestica is expected to generate 8.53 times more return on investment than CARPENTER. However, Celestica is 8.53 times more volatile than CARPENTER TECHNOLOGY P. It trades about 0.28 of its potential returns per unit of risk. CARPENTER TECHNOLOGY P is currently generating about 0.02 per unit of risk. If you would invest  4,971  in Celestica on September 19, 2024 and sell it today you would earn a total of  4,240  from holding Celestica or generate 85.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.88%
ValuesDaily Returns

Celestica  vs.  CARPENTER TECHNOLOGY P

 Performance 
       Timeline  
Celestica 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.
CARPENTER TECHNOLOGY 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in CARPENTER TECHNOLOGY P are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CARPENTER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Celestica and CARPENTER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Celestica and CARPENTER

The main advantage of trading using opposite Celestica and CARPENTER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celestica position performs unexpectedly, CARPENTER 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 CARPENTER will offset losses from the drop in CARPENTER's long position.
The idea behind Celestica and CARPENTER TECHNOLOGY P 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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