Correlation Between Cambium Networks and Ciena Corp

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

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

Diversification Opportunities for Cambium Networks and Ciena Corp

-0.75

Correlation Coefficient

Cambium Networks  Ciena Corp

Pay attention - limited upside

The 3 months correlation between Cambium and Ciena is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cambium Networks Corp and Ciena Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciena Corp and Cambium Networks 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 Cambium Networks Corp are associated (or correlated) with Ciena Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciena Corp has no effect on the direction of Cambium Networks i.e., Cambium Networks and Ciena Corp go up and down completely randomly.

Pair Corralation between Cambium Networks and Ciena Corp

Given the investment horizon of 90 days Cambium Networks Corp is expected to under-perform the Ciena Corp. In addition to that, Cambium Networks is 2.07 times more volatile than Ciena Corp. It trades about -0.06 of its total potential returns per unit of risk. Ciena Corp is currently generating about 0.17 per unit of volatility. If you would invest  5,535  in Ciena Corp on September 3, 2024 and sell it today you would earn a total of  1,437  from holding Ciena Corp or generate 25.96% return on investment over 90 days.

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

Cambium Networks Corp  vs.  Ciena Corp

Cambium Networks Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cambium Networks Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ciena Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ciena Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Ciena Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cambium Networks and Ciena Corp

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

The idea behind Cambium Networks Corp and Ciena Corp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.