Correlation Between DENSO CORP and CEOTRONICS (CEKSG)

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

By analyzing existing cross correlation between DENSO P ADR and CEOTRONICS, you can compare the effects of market volatilities on DENSO CORP and CEOTRONICS (CEKSG) 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 DENSO CORP with a short position of CEOTRONICS (CEKSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of DENSO CORP and CEOTRONICS (CEKSG).

Diversification Opportunities for DENSO CORP and CEOTRONICS (CEKSG)

0.12

Correlation Coefficient

DENSO CORP  CEOTRONICS (CEKSG)

Average diversification

The 3 months correlation between DENSO and CEOTRONICS is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding DENSO P ADR and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS (CEKSG) and DENSO CORP 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 DENSO P ADR are associated (or correlated) with CEOTRONICS (CEKSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS (CEKSG) has no effect on the direction of DENSO CORP i.e., DENSO CORP and CEOTRONICS (CEKSG) go up and down completely randomly.

Pair Corralation between DENSO CORP and CEOTRONICS (CEKSG)

Assuming the 90 days trading horizon DENSO CORP is expected to generate 1.41 times less return on investment than CEOTRONICS (CEKSG). But when comparing it to its historical volatility, DENSO P ADR is 1.92 times less risky than CEOTRONICS (CEKSG). It trades about 0.05 of its potential returns per unit of risk. CEOTRONICS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  554.00  in CEOTRONICS on October 8, 2024 and sell it today you would earn a total of  26.00  from holding CEOTRONICS or generate 4.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

DENSO P ADR  vs.  CEOTRONICS

DENSO P ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DENSO P ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DENSO CORP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

CEOTRONICS (CEKSG)

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS (CEKSG) may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DENSO CORP and CEOTRONICS (CEKSG)

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

The idea behind DENSO P ADR 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.