Correlation Between Valens and CEVA

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

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

Diversification Opportunities for Valens and CEVA

0.39

Correlation Coefficient

Valens  CEVA

Weak diversification

The 3 months correlation between Valens and CEVA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Valens and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and Valens 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 Valens 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 Valens i.e., Valens and CEVA go up and down completely randomly.

Pair Corralation between Valens and CEVA

Considering the 90-day investment horizon Valens is expected to generate 1.05 times more return on investment than CEVA. However, Valens is 1.05 times more volatile than CEVA Inc. It trades about -0.04 of its potential returns per unit of risk. CEVA Inc is currently generating about -0.05 per unit of risk. If you would invest  249.00  in Valens on December 27, 2024 and sell it today you would lose (37.00) from holding Valens or give up 14.86% of portfolio value over 90 days.

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

Valens  vs.  CEVA Inc

Valens

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Valens and CEVA

The main advantage of trading using opposite Valens and CEVA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valens 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 Valens 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 CEOs Directory module to screen CEOs from public companies around the world.