Correlation Between Cepton and Roivant Sciences

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

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

Diversification Opportunities for Cepton and Roivant Sciences

0.0

Correlation Coefficient

Cepton  Roivant Sciences

Pay attention - limited upside

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

Pair Corralation between Cepton and Roivant Sciences

If you would invest (100.00) in Roivant Sciences on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Roivant Sciences 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.  Roivant Sciences

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.

Roivant Sciences

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cepton and Roivant Sciences

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

The idea behind Cepton Inc and Roivant Sciences 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.