Correlation Between Ichor Holdings and Ceragon Networks
Can any of the company-specific risk be diversified away by investing in both Ichor Holdings and Ceragon Networks 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 Ichor Holdings and Ceragon Networks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ichor Holdings and Ceragon Networks, you can compare the effects of market volatilities on Ichor Holdings and Ceragon Networks 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 Ichor Holdings with a short position of Ceragon Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ichor Holdings and Ceragon Networks.
Diversification Opportunities for Ichor Holdings and Ceragon Networks
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ichor and Ceragon is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Holdings and Ceragon Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceragon Networks and Ichor Holdings 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 Ichor Holdings are associated (or correlated) with Ceragon Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceragon Networks has no effect on the direction of Ichor Holdings i.e., Ichor Holdings and Ceragon Networks go up and down completely randomly.
Pair Corralation between Ichor Holdings and Ceragon Networks
Given the investment horizon of 90 days Ichor Holdings is expected to generate 3.31 times less return on investment than Ceragon Networks. In addition to that, Ichor Holdings is 1.06 times more volatile than Ceragon Networks. It trades about 0.05 of its total potential returns per unit of risk. Ceragon Networks is currently generating about 0.16 per unit of volatility. If you would invest 292.00 in Ceragon Networks on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Ceragon Networks or generate 41.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ichor Holdings vs. Ceragon Networks
Performance |
| Timeline |
| Ichor Holdings |
| Ceragon Networks |
Ichor Holdings and Ceragon Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ichor Holdings and Ceragon Networks
The main advantage of trading using opposite Ichor Holdings and Ceragon Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Holdings position performs unexpectedly, Ceragon Networks 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 Ceragon Networks will offset losses from the drop in Ceragon Networks' long position.The idea behind Ichor Holdings and Ceragon Networks 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.| Ceragon Networks vs. Ichor Holdings | Ceragon Networks vs. Fabrinet | Ceragon Networks vs. Hello Group | Ceragon Networks vs. Ultra Clean 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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