Correlation Between Cepton and Shimadzu

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

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

Diversification Opportunities for Cepton and Shimadzu

0.73

Correlation Coefficient

Cepton  Shimadzu

Poor diversification

The 3 months correlation between Cepton and Shimadzu is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Shimadzu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimadzu and Cepton 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 Cepton Inc are associated (or correlated) with Shimadzu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimadzu has no effect on the direction of Cepton i.e., Cepton and Shimadzu go up and down completely randomly.

Pair Corralation between Cepton and Shimadzu

If you would invest  313.00  in Cepton Inc on September 22, 2024 and sell it today you would earn a total of  8.00  from holding Cepton Inc or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	91.3%
Values	Daily Returns

Cepton Inc  vs.  Shimadzu

Cepton Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cepton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Shimadzu

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shimadzu are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Shimadzu is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cepton and Shimadzu

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

The idea behind Cepton Inc and Shimadzu 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.