Correlation Between Celestica and Zapp Electric

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

By analyzing existing cross correlation between Celestica and Zapp Electric Vehicles, you can compare the effects of market volatilities on Celestica and Zapp Electric 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 Zapp Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celestica and Zapp Electric.

Diversification Opportunities for Celestica and Zapp Electric

-0.95

Correlation Coefficient

Celestica  Zapp Electric

Pay attention - limited upside

The 3 months correlation between Celestica and Zapp is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Celestica and Zapp Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zapp Electric Vehicles 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 Zapp Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zapp Electric Vehicles has no effect on the direction of Celestica i.e., Celestica and Zapp Electric go up and down completely randomly.

Pair Corralation between Celestica and Zapp Electric

Considering the 90-day investment horizon Celestica is expected to generate 0.77 times more return on investment than Zapp Electric. However, Celestica is 1.3 times less risky than Zapp Electric. It trades about 0.24 of its potential returns per unit of risk. Zapp Electric Vehicles is currently generating about -0.24 per unit of risk. If you would invest  6,125  in Celestica on October 10, 2024 and sell it today you would earn a total of  4,122  from holding Celestica or generate 67.3% return on investment over 90 days.

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

Celestica  vs.  Zapp Electric Vehicles

Celestica

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Zapp Electric Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zapp Electric Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Celestica and Zapp Electric

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

The idea behind Celestica and Zapp Electric Vehicles 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.