Correlation Between Cipherlab and Castles Technology
Can any of the company-specific risk be diversified away by investing in both Cipherlab and Castles Technology 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 Cipherlab and Castles Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cipherlab Co and Castles Technology Co, you can compare the effects of market volatilities on Cipherlab and Castles Technology 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 Cipherlab with a short position of Castles Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cipherlab and Castles Technology.
Diversification Opportunities for Cipherlab and Castles Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cipherlab and Castles is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cipherlab Co and Castles Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castles Technology and Cipherlab 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 Cipherlab Co are associated (or correlated) with Castles Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castles Technology has no effect on the direction of Cipherlab i.e., Cipherlab and Castles Technology go up and down completely randomly.
Pair Corralation between Cipherlab and Castles Technology
Assuming the 90 days trading horizon Cipherlab Co is expected to generate 1.05 times more return on investment than Castles Technology. However, Cipherlab is 1.05 times more volatile than Castles Technology Co. It trades about 0.04 of its potential returns per unit of risk. Castles Technology Co is currently generating about 0.03 per unit of risk. If you would invest 1,679 in Cipherlab Co on October 13, 2024 and sell it today you would earn a total of 726.00 from holding Cipherlab Co or generate 43.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Cipherlab Co vs. Castles Technology Co
Performance |
| Timeline |
| Cipherlab |
| Castles Technology |
Cipherlab and Castles Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cipherlab and Castles Technology
The main advantage of trading using opposite Cipherlab and Castles Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cipherlab position performs unexpectedly, Castles Technology 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 Castles Technology will offset losses from the drop in Castles Technology's long position.| Cipherlab vs. AVerMedia Technologies | Cipherlab vs. Min Aik Technology | Cipherlab vs. Uniform Industrial Corp | Cipherlab vs. Information Technology Total |
| Castles Technology vs. AVerMedia Technologies | Castles Technology vs. Min Aik Technology | Castles Technology vs. Jean Co | Castles Technology vs. Uniform Industrial Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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