Correlation Between MKS Instruments and Cepton

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

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

Diversification Opportunities for MKS Instruments and Cepton

0.04

Correlation Coefficient

MKS Instruments  Cepton

Significant diversification

The 3 months correlation between MKS and Cepton is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MKS Instruments and Cepton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cepton Inc and MKS Instruments 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 MKS Instruments 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 MKS Instruments i.e., MKS Instruments and Cepton go up and down completely randomly.

Pair Corralation between MKS Instruments and Cepton

Given the investment horizon of 90 days MKS Instruments is expected to under-perform the Cepton. In addition to that, MKS Instruments is 4.65 times more volatile than Cepton Inc. It trades about -0.2 of its total potential returns per unit of risk. Cepton Inc is currently generating about 0.26 per unit of volatility. If you would invest  312.00  in Cepton Inc on September 25, 2024 and sell it today you would earn a total of  8.00  from holding Cepton Inc or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

MKS Instruments  vs.  Cepton Inc

MKS Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKS Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, MKS Instruments is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Cepton Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cepton is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MKS Instruments and Cepton

The main advantage of trading using opposite MKS Instruments and Cepton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MKS Instruments 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 MKS Instruments 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.