Correlation Between Cepton and QualTek Services

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

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

Diversification Opportunities for Cepton and QualTek Services

0.0

Correlation Coefficient

Cepton  QualTek Services

Pay attention - limited upside

The 3 months correlation between Cepton and QualTek is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and QualTek Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QualTek Services 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 QualTek Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QualTek Services has no effect on the direction of Cepton i.e., Cepton and QualTek Services go up and down completely randomly.

Pair Corralation between Cepton and QualTek Services

If you would invest (100.00) in QualTek Services on December 4, 2024 and sell it today you would earn a total of  100.00  from holding QualTek Services or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cepton Inc  vs.  QualTek Services

Cepton Inc

Risk-Adjusted Performance

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.

QualTek Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days QualTek Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, QualTek Services is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cepton and QualTek Services

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

The idea behind Cepton Inc and QualTek Services 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.