Correlation Between Cepton and Cognex
Can any of the company-specific risk be diversified away by investing in both Cepton and Cognex 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 Cepton and Cognex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Cognex, you can compare the effects of market volatilities on Cepton and Cognex 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 Cepton with a short position of Cognex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Cognex.
Diversification Opportunities for Cepton and Cognex
Weak diversification
The 3 months correlation between Cepton and Cognex is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Cognex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognex and Cepton 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 Cepton Inc are associated (or correlated) with Cognex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognex has no effect on the direction of Cepton i.e., Cepton and Cognex go up and down completely randomly.
Pair Corralation between Cepton and Cognex
Given the investment horizon of 90 days Cepton Inc is expected to under-perform the Cognex. In addition to that, Cepton is 2.57 times more volatile than Cognex. It trades about -0.02 of its total potential returns per unit of risk. Cognex is currently generating about 0.0 per unit of volatility. If you would invest 4,747 in Cognex on August 28, 2024 and sell it today you would lose (723.00) from holding Cognex or give up 15.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cepton Inc vs. Cognex
Performance |
| Timeline |
| Cepton Inc |
| Cognex |
Cepton and Cognex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Cognex
The main advantage of trading using opposite Cepton and Cognex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Cognex 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 Cognex will offset losses from the drop in Cognex's long position.The idea behind Cepton Inc and Cognex 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.| Cognex vs. Vontier Corp | Cognex vs. Teledyne Technologies Incorporated | Cognex vs. ESCO Technologies | Cognex vs. MKS Instruments |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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