Correlation Between Cepton and US Nuclear

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

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

Diversification Opportunities for Cepton and US Nuclear

0.38

Correlation Coefficient

Cepton  US Nuclear

Weak diversification

The 3 months correlation between Cepton and UCLE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and US Nuclear Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Nuclear Corp 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 US Nuclear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Nuclear Corp has no effect on the direction of Cepton i.e., Cepton and US Nuclear go up and down completely randomly.

Pair Corralation between Cepton and US Nuclear

Given the investment horizon of 90 days Cepton is expected to generate 130.12 times less return on investment than US Nuclear. But when comparing it to its historical volatility, Cepton Inc is 112.4 times less risky than US Nuclear. It trades about 0.09 of its potential returns per unit of risk. US Nuclear Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15.00  in US Nuclear Corp on September 22, 2024 and sell it today you would lose (7.00) from holding US Nuclear Corp or give up 46.67% of portfolio value over 90 days.

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

Cepton Inc  vs.  US Nuclear Corp

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.

US Nuclear Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US Nuclear Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady essential indicators, US Nuclear exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cepton and US Nuclear

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

The idea behind Cepton Inc and US Nuclear Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.