Correlation Between Ceragon Networks and State Gas

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

By analyzing existing cross correlation between Ceragon Networks and State Gas, you can compare the effects of market volatilities on Ceragon Networks and State Gas 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 Ceragon Networks with a short position of State Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceragon Networks and State Gas.

Diversification Opportunities for Ceragon Networks and State Gas

0.69

Correlation Coefficient

Ceragon Networks  State Gas

Poor diversification

The 3 months correlation between Ceragon and State is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ceragon Networks and State Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Gas and Ceragon Networks 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 Ceragon Networks are associated (or correlated) with State Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Gas has no effect on the direction of Ceragon Networks i.e., Ceragon Networks and State Gas go up and down completely randomly.

Pair Corralation between Ceragon Networks and State Gas

Given the investment horizon of 90 days Ceragon Networks is expected to under-perform the State Gas. In addition to that, Ceragon Networks is 1.45 times more volatile than State Gas. It trades about -0.17 of its total potential returns per unit of risk. State Gas is currently generating about -0.02 per unit of volatility. If you would invest  3.90  in State Gas on December 29, 2024 and sell it today you would lose (0.30) from holding State Gas or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

Ceragon Networks  vs.  State Gas

Ceragon Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ceragon Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

State Gas

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Gas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ceragon Networks and State Gas

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

The idea behind Ceragon Networks and State Gas 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.