Correlation Between Strategic Investments and CEOTRONICS

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

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

Diversification Opportunities for Strategic Investments and CEOTRONICS

-0.59

Correlation Coefficient

Strategic Investments  CEOTRONICS

Excellent diversification

The 3 months correlation between Strategic and CEOTRONICS is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS and Strategic Investments 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 Strategic Investments AS are associated (or correlated) with CEOTRONICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS has no effect on the direction of Strategic Investments i.e., Strategic Investments and CEOTRONICS go up and down completely randomly.

Pair Corralation between Strategic Investments and CEOTRONICS

Assuming the 90 days horizon Strategic Investments is expected to generate 9.52 times less return on investment than CEOTRONICS. But when comparing it to its historical volatility, Strategic Investments AS is 1.36 times less risky than CEOTRONICS. It trades about 0.02 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  520.00  in CEOTRONICS on September 24, 2024 and sell it today you would earn a total of  50.00  from holding CEOTRONICS or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Strategic Investments AS  vs.  CEOTRONICS

Strategic Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Investments AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Strategic Investments is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CEOTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Strategic Investments and CEOTRONICS

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

The idea behind Strategic Investments AS and CEOTRONICS 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.