Correlation Between Cellebrite and Tenable Holdings

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

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

Diversification Opportunities for Cellebrite and Tenable Holdings

0.63

Correlation Coefficient

Cellebrite  Tenable Holdings

Poor diversification

The 3 months correlation between Cellebrite and Tenable is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cellebrite DI and Tenable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenable Holdings and Cellebrite 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 Cellebrite DI are associated (or correlated) with Tenable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenable Holdings has no effect on the direction of Cellebrite i.e., Cellebrite and Tenable Holdings go up and down completely randomly.

Pair Corralation between Cellebrite and Tenable Holdings

Given the investment horizon of 90 days Cellebrite DI is expected to generate 1.25 times more return on investment than Tenable Holdings. However, Cellebrite is 1.25 times more volatile than Tenable Holdings. It trades about 0.1 of its potential returns per unit of risk. Tenable Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,752  in Cellebrite DI on September 15, 2024 and sell it today you would earn a total of  236.00  from holding Cellebrite DI or generate 13.47% return on investment over 90 days.

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

Cellebrite DI  vs.  Tenable Holdings

Cellebrite DI

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cellebrite DI are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, Cellebrite unveiled solid returns over the last few months and may actually be approaching a breakup point.

Tenable Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tenable Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tenable Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cellebrite and Tenable Holdings

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

The idea behind Cellebrite DI and Tenable Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.