Correlation Between Microchip Technology and Celestica

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

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

Diversification Opportunities for Microchip Technology and Celestica

0.09

Correlation Coefficient

Microchip Technology  Celestica

Significant diversification

The 3 months correlation between Microchip and Celestica is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Microchip Technology 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 Microchip Technology 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 Microchip Technology i.e., Microchip Technology and Celestica go up and down completely randomly.

Pair Corralation between Microchip Technology and Celestica

Given the investment horizon of 90 days Microchip Technology is expected to under-perform the Celestica. But the stock apears to be less risky and, when comparing its historical volatility, Microchip Technology is 2.11 times less risky than Celestica. The stock trades about -0.07 of its potential returns per unit of risk. The Celestica is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  9,382  in Celestica on December 30, 2024 and sell it today you would lose (1,113) from holding Celestica or give up 11.86% of portfolio value over 90 days.

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

Microchip Technology  vs.  Celestica

Microchip Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microchip Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Celestica

Risk-Adjusted Performance

Very Weak

Over the last 90 days Celestica has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Celestica 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 Microchip Technology and Celestica

The main advantage of trading using opposite Microchip Technology and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology 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 Microchip Technology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.