Correlation Between Cepton and Scientific Industries
Can any of the company-specific risk be diversified away by investing in both Cepton and Scientific Industries 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 Scientific Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cepton Inc and Scientific Industries, you can compare the effects of market volatilities on Cepton and Scientific Industries 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 Scientific Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cepton and Scientific Industries.
Diversification Opportunities for Cepton and Scientific Industries
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cepton and Scientific is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Scientific Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Industries 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 Scientific Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Industries has no effect on the direction of Cepton i.e., Cepton and Scientific Industries go up and down completely randomly.
Pair Corralation between Cepton and Scientific Industries
Assuming the 90 days horizon Cepton Inc is expected to under-perform the Scientific Industries. But the stock apears to be less risky and, when comparing its historical volatility, Cepton Inc is 1.6 times less risky than Scientific Industries. The stock trades about -0.21 of its potential returns per unit of risk. The Scientific Industries is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 124.00 in Scientific Industries on August 28, 2024 and sell it today you would lose (24.00) from holding Scientific Industries or give up 19.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cepton Inc vs. Scientific Industries
Performance |
| Timeline |
| Cepton Inc |
| Scientific Industries |
Cepton and Scientific Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cepton and Scientific Industries
The main advantage of trading using opposite Cepton and Scientific Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cepton position performs unexpectedly, Scientific Industries 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 Scientific Industries will offset losses from the drop in Scientific Industries' long position.| Cepton vs. Cepton Inc | Cepton vs. Thayer Ventures Acquisition | Cepton vs. Anghami Warrants | Cepton vs. Inspirato |
| Scientific Industries vs. Rezolute | Scientific Industries vs. Tempest Therapeutics | Scientific Industries vs. Forte Biosciences | Scientific Industries vs. Dyadic International |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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