Correlation Between Cepton and Focus Universal
Can any of the company-specific risk be diversified away by investing in both Cepton and Focus Universal 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 Focus Universal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Focus Universal, you can compare the effects of market volatilities on Cepton and Focus Universal 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 Focus Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Focus Universal.
Diversification Opportunities for Cepton and Focus Universal
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cepton and Focus is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Focus Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Universal 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 Focus Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Universal has no effect on the direction of Cepton i.e., Cepton and Focus Universal go up and down completely randomly.
Pair Corralation between Cepton and Focus Universal
Assuming the 90 days horizon Cepton Inc is expected to under-perform the Focus Universal. But the stock apears to be less risky and, when comparing its historical volatility, Cepton Inc is 4.37 times less risky than Focus Universal. The stock trades about -0.37 of its potential returns per unit of risk. The Focus Universal is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 346.00 in Focus Universal on November 3, 2024 and sell it today you would earn a total of 263.00 from holding Focus Universal or generate 76.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 20.0% |
| Values | Daily Returns |
Cepton Inc vs. Focus Universal
Performance |
| Timeline |
| Cepton Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Focus Universal |
Cepton and Focus Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Focus Universal
The main advantage of trading using opposite Cepton and Focus Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Focus Universal 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 Focus Universal will offset losses from the drop in Focus Universal's long position.The idea behind Cepton Inc and Focus Universal 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.| Focus Universal vs. ESCO Technologies | Focus Universal vs. Genasys | Focus Universal vs. Know Labs | Focus Universal vs. Sono Tek 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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