Correlation Between Hamilton MidSmall and Celestica

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

By analyzing existing cross correlation between Hamilton MidSmall Cap Financials and Celestica, you can compare the effects of market volatilities on Hamilton MidSmall and Celestica 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 Hamilton MidSmall with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton MidSmall and Celestica.

Diversification Opportunities for Hamilton MidSmall and Celestica

0.94

Correlation Coefficient

Hamilton MidSmall  Celestica

Almost no diversification

The 3 months correlation between Hamilton and Celestica is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton MidSmall Cap Financia and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Hamilton MidSmall 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 Hamilton MidSmall Cap Financials are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Hamilton MidSmall i.e., Hamilton MidSmall and Celestica go up and down completely randomly.

Pair Corralation between Hamilton MidSmall and Celestica

Assuming the 90 days trading horizon Hamilton MidSmall is expected to generate 4.33 times less return on investment than Celestica. But when comparing it to its historical volatility, Hamilton MidSmall Cap Financials is 2.05 times less risky than Celestica. It trades about 0.07 of its potential returns per unit of risk. Celestica is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,572  in Celestica on August 31, 2024 and sell it today you would earn a total of  10,465  from holding Celestica or generate 665.71% return on investment over 90 days.

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

Hamilton MidSmall Cap Financia  vs.  Celestica

Hamilton MidSmall Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton MidSmall Cap Financials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Hamilton MidSmall displayed solid returns over the last few months and may actually be approaching a breakup point.

Celestica

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Celestica displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hamilton MidSmall and Celestica

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

The idea behind Hamilton MidSmall Cap Financials and Celestica 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.