Correlation Between Ceragon Networks and Hengan International

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

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

Diversification Opportunities for Ceragon Networks and Hengan International

-0.37

Correlation Coefficient

Ceragon Networks  Hengan International

Very good diversification

The 3 months correlation between Ceragon and Hengan is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ceragon Networks and Hengan International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengan International and Ceragon 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 Ceragon Networks are associated (or correlated) with Hengan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengan International has no effect on the direction of Ceragon Networks i.e., Ceragon Networks and Hengan International go up and down completely randomly.

Pair Corralation between Ceragon Networks and Hengan International

Given the investment horizon of 90 days Ceragon Networks is expected to generate 1.74 times more return on investment than Hengan International. However, Ceragon Networks is 1.74 times more volatile than Hengan International Group. It trades about 0.07 of its potential returns per unit of risk. Hengan International Group is currently generating about -0.05 per unit of risk. If you would invest  192.00  in Ceragon Networks on September 5, 2024 and sell it today you would earn a total of  247.00  from holding Ceragon Networks or generate 128.65% return on investment over 90 days.

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

Ceragon Networks  vs.  Hengan International Group

Ceragon Networks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ceragon Networks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ceragon Networks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hengan International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hengan International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Hengan International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ceragon Networks and Hengan International

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

The idea behind Ceragon Networks and Hengan International Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.