Correlation Between CEVA and MaxLinear

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

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

Diversification Opportunities for CEVA and MaxLinear

0.55

Correlation Coefficient

CEVA  MaxLinear

Very weak diversification

The 3 months correlation between CEVA and MaxLinear is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CEVA Inc and MaxLinear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MaxLinear and CEVA 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 CEVA Inc are associated (or correlated) with MaxLinear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MaxLinear has no effect on the direction of CEVA i.e., CEVA and MaxLinear go up and down completely randomly.

Pair Corralation between CEVA and MaxLinear

Given the investment horizon of 90 days CEVA Inc is expected to generate 0.74 times more return on investment than MaxLinear. However, CEVA Inc is 1.35 times less risky than MaxLinear. It trades about 0.03 of its potential returns per unit of risk. MaxLinear is currently generating about 0.0 per unit of risk. If you would invest  2,492  in CEVA Inc on August 31, 2024 and sell it today you would earn a total of  423.00  from holding CEVA Inc or generate 16.97% return on investment over 90 days.

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

CEVA Inc  vs.  MaxLinear

CEVA Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEVA Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CEVA sustained solid returns over the last few months and may actually be approaching a breakup point.

MaxLinear

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MaxLinear are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, MaxLinear may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CEVA and MaxLinear

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

The idea behind CEVA Inc and MaxLinear 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.

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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.