Correlation Between CEVA and Valens

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

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

Diversification Opportunities for CEVA and Valens

-0.34

Correlation Coefficient

CEVA  Valens

Very good diversification

The 3 months correlation between CEVA and Valens is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CEVA Inc and Valens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valens 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 Valens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valens has no effect on the direction of CEVA i.e., CEVA and Valens go up and down completely randomly.

Pair Corralation between CEVA and Valens

Given the investment horizon of 90 days CEVA Inc is expected to generate 0.67 times more return on investment than Valens. However, CEVA Inc is 1.49 times less risky than Valens. It trades about 0.15 of its potential returns per unit of risk. Valens is currently generating about 0.05 per unit of risk. If you would invest  2,275  in CEVA Inc on September 3, 2024 and sell it today you would earn a total of  682.00  from holding CEVA Inc or generate 29.98% return on investment over 90 days.

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

CEVA Inc  vs.  Valens

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.

Valens

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valens are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Valens displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEVA and Valens

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

The idea behind CEVA Inc and Valens 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.