Correlation Between Castles Technology and Cipherlab
Can any of the company-specific risk be diversified away by investing in both Castles Technology and Cipherlab 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 Castles Technology and Cipherlab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castles Technology Co and Cipherlab Co, you can compare the effects of market volatilities on Castles Technology and Cipherlab 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 Castles Technology with a short position of Cipherlab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castles Technology and Cipherlab.
Diversification Opportunities for Castles Technology and Cipherlab
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Castles and Cipherlab is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Castles Technology Co and Cipherlab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipherlab and Castles 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 Castles Technology Co are associated (or correlated) with Cipherlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipherlab has no effect on the direction of Castles Technology i.e., Castles Technology and Cipherlab go up and down completely randomly.
Pair Corralation between Castles Technology and Cipherlab
Assuming the 90 days trading horizon Castles Technology Co is expected to under-perform the Cipherlab. But the stock apears to be less risky and, when comparing its historical volatility, Castles Technology Co is 1.0 times less risky than Cipherlab. The stock trades about -0.17 of its potential returns per unit of risk. The Cipherlab Co is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,575 in Cipherlab Co on September 26, 2024 and sell it today you would lose (130.00) from holding Cipherlab Co or give up 5.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castles Technology Co vs. Cipherlab Co
Performance |
| Timeline |
| Castles Technology |
| Cipherlab |
Castles Technology and Cipherlab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castles Technology and Cipherlab
The main advantage of trading using opposite Castles Technology and Cipherlab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castles Technology position performs unexpectedly, Cipherlab 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 Cipherlab will offset losses from the drop in Cipherlab's long position.| Castles Technology vs. Gold Rain Enterprises | Castles Technology vs. Cipherlab Co | Castles Technology vs. Accton Technology Corp | Castles Technology vs. Wah Hong Industrial |
| Cipherlab vs. GeoVision | Cipherlab vs. Flytech Technology Co | Cipherlab vs. Quanta Storage | Cipherlab vs. Coretronic |
Check out your portfolio center.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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