Correlation Between Cepton and Saddle Ranch

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

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

Diversification Opportunities for Cepton and Saddle Ranch

-0.14

Correlation Coefficient

Cepton  Saddle Ranch

Good diversification

The 3 months correlation between Cepton and Saddle is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Saddle Ranch Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saddle Ranch Media 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 Saddle Ranch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saddle Ranch Media has no effect on the direction of Cepton i.e., Cepton and Saddle Ranch go up and down completely randomly.

Pair Corralation between Cepton and Saddle Ranch

Given the investment horizon of 90 days Cepton Inc is expected to under-perform the Saddle Ranch. But the stock apears to be less risky and, when comparing its historical volatility, Cepton Inc is 5.51 times less risky than Saddle Ranch. The stock trades about -0.02 of its potential returns per unit of risk. The Saddle Ranch Media is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Saddle Ranch Media on October 12, 2024 and sell it today you would lose (0.04) from holding Saddle Ranch Media or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Cepton Inc  vs.  Saddle Ranch Media

Cepton Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 7 (%) 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.

Saddle Ranch Media

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saddle Ranch Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Saddle Ranch showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cepton and Saddle Ranch

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

The idea behind Cepton Inc and Saddle Ranch Media 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.