Correlation Between CyberTAN Technology and Cameo Communications

Can any of the company-specific risk be diversified away by investing in both CyberTAN Technology and Cameo Communications 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 CyberTAN Technology and Cameo Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CyberTAN Technology and Cameo Communications, you can compare the effects of market volatilities on CyberTAN Technology and Cameo Communications 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 CyberTAN Technology with a short position of Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CyberTAN Technology and Cameo Communications.

Diversification Opportunities for CyberTAN Technology and Cameo Communications

0.44

Correlation Coefficient

CyberTAN Technology  Cameo Communications

Very weak diversification

The 3 months correlation between CyberTAN and Cameo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CyberTAN Technology and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications and CyberTAN Technology 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 CyberTAN Technology are associated (or correlated) with Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of CyberTAN Technology i.e., CyberTAN Technology and Cameo Communications go up and down completely randomly.

Pair Corralation between CyberTAN Technology and Cameo Communications

Assuming the 90 days trading horizon CyberTAN Technology is expected to under-perform the Cameo Communications. In addition to that, CyberTAN Technology is 1.17 times more volatile than Cameo Communications. It trades about -0.03 of its total potential returns per unit of risk. Cameo Communications is currently generating about 0.08 per unit of volatility. If you would invest  1,040  in Cameo Communications on August 31, 2024 and sell it today you would earn a total of  130.00  from holding Cameo Communications or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CyberTAN Technology  vs.  Cameo Communications

CyberTAN Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CyberTAN Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, CyberTAN Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cameo Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cameo Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cameo Communications showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CyberTAN Technology and Cameo Communications

The main advantage of trading using opposite CyberTAN Technology and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CyberTAN Technology position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.

The idea behind CyberTAN Technology and Cameo Communications 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.