Correlation Between Cepton and Scientific Industries

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

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

Diversification Opportunities for Cepton and Scientific Industries

-0.33

Correlation Coefficient

Cepton  Scientific Industries

Very good diversification

The 3 months correlation between Cepton and Scientific is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Scientific Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scientific Industries and Cepton 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 Cepton Inc are associated (or correlated) with Scientific Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scientific Industries has no effect on the direction of Cepton i.e., Cepton and Scientific Industries go up and down completely randomly.

Pair Corralation between Cepton and Scientific Industries

Assuming the 90 days horizon Cepton Inc is expected to under-perform the Scientific Industries. In addition to that, Cepton is 1.08 times more volatile than Scientific Industries. It trades about -0.09 of its total potential returns per unit of risk. Scientific Industries is currently generating about 0.02 per unit of volatility. If you would invest  129.00  in Scientific Industries on August 30, 2024 and sell it today you would lose (9.00) from holding Scientific Industries or give up 6.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Cepton Inc  vs.  Scientific Industries

Cepton Inc

Risk-Adjusted Performance

3 of 100

Insignificant

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

Scientific Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scientific Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Scientific Industries is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cepton and Scientific Industries

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

The idea behind Cepton Inc and Scientific Industries 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.