Correlation Between COSTCO WHOLESALE and CEOTRONICS (CEKSG)
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and CEOTRONICS (CEKSG) 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 COSTCO WHOLESALE and CEOTRONICS (CEKSG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and CEOTRONICS, you can compare the effects of market volatilities on COSTCO WHOLESALE and CEOTRONICS (CEKSG) 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 COSTCO WHOLESALE with a short position of CEOTRONICS (CEKSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and CEOTRONICS (CEKSG).
Diversification Opportunities for COSTCO WHOLESALE and CEOTRONICS (CEKSG)
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COSTCO and CEOTRONICS is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and CEOTRONICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEOTRONICS (CEKSG) and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with CEOTRONICS (CEKSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEOTRONICS (CEKSG) has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and CEOTRONICS (CEKSG) go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and CEOTRONICS (CEKSG)
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to under-perform the CEOTRONICS (CEKSG). But the stock apears to be less risky and, when comparing its historical volatility, COSTCO WHOLESALE CDR is 2.74 times less risky than CEOTRONICS (CEKSG). The stock trades about -0.36 of its potential returns per unit of risk. The CEOTRONICS is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 605.00 in CEOTRONICS on December 13, 2024 and sell it today you would earn a total of 295.00 from holding CEOTRONICS or generate 48.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. CEOTRONICS
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| CEOTRONICS (CEKSG) |
COSTCO WHOLESALE and CEOTRONICS (CEKSG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and CEOTRONICS (CEKSG)
The main advantage of trading using opposite COSTCO WHOLESALE and CEOTRONICS (CEKSG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, CEOTRONICS (CEKSG) 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 CEOTRONICS (CEKSG) will offset losses from the drop in CEOTRONICS (CEKSG)'s long position.| COSTCO WHOLESALE vs. NORWEGIAN AIR SHUT | ||
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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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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