Correlation Between Cepton and Microvision
Can any of the company-specific risk be diversified away by investing in both Cepton and Microvision 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 Microvision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Microvision, you can compare the effects of market volatilities on Cepton and Microvision 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 Microvision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Microvision.
Diversification Opportunities for Cepton and Microvision
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cepton and Microvision is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Microvision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microvision 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 Microvision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microvision has no effect on the direction of Cepton i.e., Cepton and Microvision go up and down completely randomly.
Pair Corralation between Cepton and Microvision
Given the investment horizon of 90 days Cepton Inc is expected to generate 0.86 times more return on investment than Microvision. However, Cepton Inc is 1.16 times less risky than Microvision. It trades about 0.0 of its potential returns per unit of risk. Microvision is currently generating about -0.06 per unit of risk. If you would invest 388.00 in Cepton Inc on September 4, 2024 and sell it today you would lose (70.00) from holding Cepton Inc or give up 18.04% 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. Microvision
Performance |
| Timeline |
| Cepton Inc |
| Microvision |
Cepton and Microvision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Microvision
The main advantage of trading using opposite Cepton and Microvision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Microvision 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 Microvision will offset losses from the drop in Microvision's long position.The idea behind Cepton Inc and Microvision 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.| Microvision vs. Focus Universal | Microvision vs. ESCO Technologies | Microvision vs. Genasys | Microvision vs. Cepton Inc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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