Correlation Between Four Seasons and Celestica
Can any of the company-specific risk be diversified away by investing in both Four Seasons and Celestica 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 Four Seasons and Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Four Seasons Education and Celestica, you can compare the effects of market volatilities on Four Seasons and Celestica 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 Four Seasons with a short position of Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Seasons and Celestica.
Diversification Opportunities for Four Seasons and Celestica
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Four and Celestica is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Four Seasons 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 Four Seasons Education are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Four Seasons i.e., Four Seasons and Celestica go up and down completely randomly.
Pair Corralation between Four Seasons and Celestica
Given the investment horizon of 90 days Four Seasons is expected to generate 5.19 times less return on investment than Celestica. But when comparing it to its historical volatility, Four Seasons Education is 1.42 times less risky than Celestica. It trades about 0.06 of its potential returns per unit of risk. Celestica is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,397 in Celestica on September 19, 2024 and sell it today you would earn a total of 1,384 from holding Celestica or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Four Seasons Education vs. Celestica
Performance |
| Timeline |
| Four Seasons Education |
| Celestica |
Four Seasons and Celestica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Four Seasons and Celestica
The main advantage of trading using opposite Four Seasons and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.| Four Seasons vs. Wah Fu Education | Four Seasons vs. Sunlands Technology Group | Four Seasons vs. 51Talk Online Education | Four Seasons vs. China Liberal Education |
| Celestica vs. IONQ Inc | Celestica vs. Quantum | Celestica vs. Super Micro Computer | Celestica vs. Red Cat Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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