Correlation Between CeoTronics and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both CeoTronics and CenterPoint Energy 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 CeoTronics and CenterPoint Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CeoTronics AG and CenterPoint Energy, you can compare the effects of market volatilities on CeoTronics and CenterPoint Energy 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 CeoTronics with a short position of CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CeoTronics and CenterPoint Energy.
Diversification Opportunities for CeoTronics and CenterPoint Energy
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CeoTronics and CenterPoint is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding CeoTronics AG and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy and CeoTronics 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 CeoTronics AG are associated (or correlated) with CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of CeoTronics i.e., CeoTronics and CenterPoint Energy go up and down completely randomly.
Pair Corralation between CeoTronics and CenterPoint Energy
Assuming the 90 days trading horizon CeoTronics AG is expected to generate 1.06 times more return on investment than CenterPoint Energy. However, CeoTronics is 1.06 times more volatile than CenterPoint Energy. It trades about 0.13 of its potential returns per unit of risk. CenterPoint Energy is currently generating about 0.08 per unit of risk. If you would invest 590.00 in CeoTronics AG on October 23, 2024 and sell it today you would earn a total of 15.00 from holding CeoTronics AG or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
CeoTronics AG vs. CenterPoint Energy
Performance |
| Timeline |
| CeoTronics AG |
| CenterPoint Energy |
CeoTronics and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CeoTronics and CenterPoint Energy
The main advantage of trading using opposite CeoTronics and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CeoTronics position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| CeoTronics vs. GLG LIFE TECH | CeoTronics vs. Kingdee International Software | CeoTronics vs. Fast Retailing Co | CeoTronics vs. Agilent Technologies |
| CenterPoint Energy vs. MARKET VECTR RETAIL | CenterPoint Energy vs. UNIVERSAL MUSIC GROUP | CenterPoint Energy vs. Fast Retailing Co | CenterPoint Energy vs. CeoTronics AG |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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