Correlation Between Ceragon Networks and NRJ
Can any of the company-specific risk be diversified away by investing in both Ceragon Networks and NRJ 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 NRJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ceragon Networks and NRJ Group, you can compare the effects of market volatilities on Ceragon Networks and NRJ 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 NRJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceragon Networks and NRJ.
Diversification Opportunities for Ceragon Networks and NRJ
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ceragon and NRJ is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ceragon Networks and NRJ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRJ Group 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 NRJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRJ Group has no effect on the direction of Ceragon Networks i.e., Ceragon Networks and NRJ go up and down completely randomly.
Pair Corralation between Ceragon Networks and NRJ
Given the investment horizon of 90 days Ceragon Networks is expected to under-perform the NRJ. In addition to that, Ceragon Networks is 5.65 times more volatile than NRJ Group. It trades about -0.09 of its total potential returns per unit of risk. NRJ Group is currently generating about -0.05 per unit of volatility. If you would invest 700.00 in NRJ Group on December 2, 2024 and sell it today you would lose (22.00) from holding NRJ Group or give up 3.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.83% |
Values | Daily Returns |
Ceragon Networks vs. NRJ Group
Performance |
Timeline |
Ceragon Networks |
NRJ Group |
Ceragon Networks and NRJ Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ceragon Networks and NRJ
The main advantage of trading using opposite Ceragon Networks and NRJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceragon Networks position performs unexpectedly, NRJ 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 NRJ will offset losses from the drop in NRJ's long position.Ceragon Networks vs. Cambium Networks Corp | Ceragon Networks vs. KVH Industries | Ceragon Networks vs. Knowles Cor | Ceragon Networks vs. AudioCodes |
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Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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