Correlation Between Cepton and Ituran Location

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

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

Diversification Opportunities for Cepton and Ituran Location

-0.73

Correlation Coefficient

Cepton  Ituran Location

Pay attention - limited upside

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

Pair Corralation between Cepton and Ituran Location

Assuming the 90 days horizon Cepton Inc is expected to generate 10.43 times more return on investment than Ituran Location. However, Cepton is 10.43 times more volatile than Ituran Location and. It trades about 0.04 of its potential returns per unit of risk. Ituran Location and is currently generating about 0.07 per unit of risk. If you would invest  12.00  in Cepton Inc on October 23, 2024 and sell it today you would lose (11.17) from holding Cepton Inc or give up 93.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.38%
Values	Daily Returns

Cepton Inc  vs.  Ituran Location and

Cepton Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cepton Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Cepton is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ituran Location

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ituran Location and are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Ituran Location displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cepton and Ituran Location

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

The idea behind Cepton Inc and Ituran Location and 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.