Correlation Between Cameo Communications and Thinking Electronic
Can any of the company-specific risk be diversified away by investing in both Cameo Communications and Thinking Electronic 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 Cameo Communications and Thinking Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cameo Communications and Thinking Electronic Industrial, you can compare the effects of market volatilities on Cameo Communications and Thinking Electronic 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 Cameo Communications with a short position of Thinking Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cameo Communications and Thinking Electronic.
Diversification Opportunities for Cameo Communications and Thinking Electronic
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cameo and Thinking is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cameo Communications and Thinking Electronic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinking Electronic and Cameo 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 Cameo Communications are associated (or correlated) with Thinking Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinking Electronic has no effect on the direction of Cameo Communications i.e., Cameo Communications and Thinking Electronic go up and down completely randomly.
Pair Corralation between Cameo Communications and Thinking Electronic
Assuming the 90 days trading horizon Cameo Communications is expected to generate 4.12 times less return on investment than Thinking Electronic. In addition to that, Cameo Communications is 1.28 times more volatile than Thinking Electronic Industrial. It trades about 0.0 of its total potential returns per unit of risk. Thinking Electronic Industrial is currently generating about 0.02 per unit of volatility. If you would invest 14,700 in Thinking Electronic Industrial on November 5, 2024 and sell it today you would earn a total of 1,700 from holding Thinking Electronic Industrial or generate 11.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cameo Communications vs. Thinking Electronic Industrial
Performance |
| Timeline |
| Cameo Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Thinking Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cameo Communications and Thinking Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cameo Communications and Thinking Electronic
The main advantage of trading using opposite Cameo Communications and Thinking Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cameo Communications position performs unexpectedly, Thinking Electronic 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 Thinking Electronic will offset losses from the drop in Thinking Electronic's long position.The idea behind Cameo Communications and Thinking Electronic Industrial 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.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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