Correlation Between Eastern and Cellebrite

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

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

Diversification Opportunities for Eastern and Cellebrite

-0.73

Correlation Coefficient

Eastern  Cellebrite

Pay attention - limited upside

The 3 months correlation between Eastern and Cellebrite is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co and Cellebrite DI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellebrite DI Equity and Eastern 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 Eastern Co are associated (or correlated) with Cellebrite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellebrite DI Equity has no effect on the direction of Eastern i.e., Eastern and Cellebrite go up and down completely randomly.

Pair Corralation between Eastern and Cellebrite

Considering the 90-day investment horizon Eastern is expected to generate 7.39 times less return on investment than Cellebrite. But when comparing it to its historical volatility, Eastern Co is 1.98 times less risky than Cellebrite. It trades about 0.05 of its potential returns per unit of risk. Cellebrite DI Equity is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  279.00  in Cellebrite DI Equity on September 14, 2024 and sell it today you would earn a total of  236.00  from holding Cellebrite DI Equity or generate 84.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	50.79%
Values	Daily Returns

Eastern Co  vs.  Cellebrite DI Equity

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Cellebrite DI Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Eastern and Cellebrite

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

The idea behind Eastern Co and Cellebrite DI Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.