Correlation Between Sequans Communications and CEVA

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

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

Diversification Opportunities for Sequans Communications and CEVA

0.07

Correlation Coefficient

Sequans Communications  CEVA

Significant diversification

The 3 months correlation between Sequans and CEVA is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sequans Communications SA and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and Sequans Communications 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 Sequans Communications SA are associated (or correlated) with CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of Sequans Communications i.e., Sequans Communications and CEVA go up and down completely randomly.

Pair Corralation between Sequans Communications and CEVA

Given the investment horizon of 90 days Sequans Communications SA is expected to under-perform the CEVA. But the stock apears to be less risky and, when comparing its historical volatility, Sequans Communications SA is 1.1 times less risky than CEVA. The stock trades about -0.08 of its potential returns per unit of risk. The CEVA Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,182  in CEVA Inc on December 21, 2024 and sell it today you would lose (263.00) from holding CEVA Inc or give up 8.27% of portfolio value over 90 days.

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

Sequans Communications SA  vs.  CEVA Inc

Sequans Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sequans Communications SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CEVA Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CEVA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CEVA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sequans Communications and CEVA

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

The idea behind Sequans Communications SA and CEVA Inc 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.