Correlation Between CEVA and POET Technologies
Can any of the company-specific risk be diversified away by investing in both CEVA and POET Technologies 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 POET Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEVA Inc and POET Technologies, you can compare the effects of market volatilities on CEVA and POET Technologies 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 POET Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEVA and POET Technologies.
Diversification Opportunities for CEVA and POET Technologies
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CEVA and POET is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CEVA Inc and POET Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POET Technologies 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 POET Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POET Technologies has no effect on the direction of CEVA i.e., CEVA and POET Technologies go up and down completely randomly.
Pair Corralation between CEVA and POET Technologies
Given the investment horizon of 90 days CEVA is expected to generate 1.26 times less return on investment than POET Technologies. But when comparing it to its historical volatility, CEVA Inc is 2.39 times less risky than POET Technologies. It trades about 0.18 of its potential returns per unit of risk. POET Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 317.00 in POET Technologies on September 16, 2024 and sell it today you would earn a total of 108.00 from holding POET Technologies or generate 34.07% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
CEVA Inc vs. POET Technologies
Performance |
Timeline |
CEVA Inc |
POET Technologies |
CEVA and POET Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CEVA and POET Technologies
The main advantage of trading using opposite CEVA and POET Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEVA position performs unexpectedly, POET Technologies 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 POET Technologies will offset losses from the drop in POET Technologies' long position.CEVA vs. MagnaChip Semiconductor | CEVA vs. MACOM Technology Solutions | CEVA vs. FormFactor | CEVA vs. MaxLinear |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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