Correlation Between Cepton and Satellogic Warrant

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

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

Diversification Opportunities for Cepton and Satellogic Warrant

-0.38

Correlation Coefficient

Cepton  Satellogic Warrant

Very good diversification

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

Pair Corralation between Cepton and Satellogic Warrant

Assuming the 90 days horizon Cepton is expected to generate 30.15 times less return on investment than Satellogic Warrant. But when comparing it to its historical volatility, Cepton Inc is 3.47 times less risky than Satellogic Warrant. It trades about 0.04 of its potential returns per unit of risk. Satellogic Warrant is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  3.99  in Satellogic Warrant on September 18, 2024 and sell it today you would earn a total of  48.01  from holding Satellogic Warrant or generate 1203.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.29%
Values	Daily Returns

Cepton Inc  vs.  Satellogic Warrant

Cepton Inc

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cepton showed solid returns over the last few months and may actually be approaching a breakup point.

Satellogic Warrant

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic Warrant are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Satellogic Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cepton and Satellogic Warrant

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

The idea behind Cepton Inc and Satellogic Warrant 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.