Correlation Between Sono Tek and Cepton
Can any of the company-specific risk be diversified away by investing in both Sono Tek and Cepton 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 Sono Tek and Cepton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and Cepton Inc, you can compare the effects of market volatilities on Sono Tek and Cepton 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 Sono Tek with a short position of Cepton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Cepton.
Diversification Opportunities for Sono Tek and Cepton
Weak diversification
The 3 months correlation between Sono and Cepton is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Sono Tek i.e., Sono Tek and Cepton go up and down completely randomly.
Pair Corralation between Sono Tek and Cepton
Given the investment horizon of 90 days Sono Tek Corp is expected to under-perform the Cepton. But the stock apears to be less risky and, when comparing its historical volatility, Sono Tek Corp is 6.81 times less risky than Cepton. The stock trades about -0.01 of its potential returns per unit of risk. The Cepton Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Cepton Inc on August 27, 2024 and sell it today you would lose (10.00) from holding Cepton Inc or give up 90.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.65% |
| Values | Daily Returns |
Sono Tek Corp vs. Cepton Inc
Performance |
| Timeline |
| Sono Tek Corp |
| Cepton Inc |
Sono Tek and Cepton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Cepton
The main advantage of trading using opposite Sono Tek and Cepton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, Cepton 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 Cepton will offset losses from the drop in Cepton's long position.The idea behind Sono Tek Corp and Cepton Inc 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.| Cepton vs. Cepton Inc | Cepton vs. Thayer Ventures Acquisition | Cepton vs. Anghami Warrants | Cepton vs. Inspirato |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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