Correlation Between Tritium DCFC and Cepton

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

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

Diversification Opportunities for Tritium DCFC and Cepton

0.13

Correlation Coefficient

Tritium DCFC  Cepton

Average diversification

The 3 months correlation between Tritium and Cepton is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Tritium DCFC Limited and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc and Tritium DCFC 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 Tritium DCFC Limited are associated (or correlated) with Cepton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cepton Inc has no effect on the direction of Tritium DCFC i.e., Tritium DCFC and Cepton go up and down completely randomly.

Pair Corralation between Tritium DCFC and Cepton

If you would invest  0.88  in Cepton Inc on September 12, 2024 and sell it today you would earn a total of  0.02  from holding Cepton Inc or generate 2.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.23%
Values	Daily Returns

Tritium DCFC Limited  vs.  Cepton Inc

Tritium DCFC Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tritium DCFC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Tritium DCFC is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cepton Inc

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 4 (%) 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.

Pair Trading with Tritium DCFC and Cepton

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

The idea behind Tritium DCFC Limited and Cepton Inc 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.