Correlation Between Murata Manufacturing and Celestica

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

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

Diversification Opportunities for Murata Manufacturing and Celestica

-0.91

Correlation Coefficient

Murata Manufacturing  Celestica

Pay attention - limited upside

The 3 months correlation between Murata and Celestica is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Murata Manufacturing and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica and Murata Manufacturing 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 Murata Manufacturing are associated (or correlated) with Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Murata Manufacturing i.e., Murata Manufacturing and Celestica go up and down completely randomly.

Pair Corralation between Murata Manufacturing and Celestica

Assuming the 90 days horizon Murata Manufacturing is expected to under-perform the Celestica. But the pink sheet apears to be less risky and, when comparing its historical volatility, Murata Manufacturing is 2.8 times less risky than Celestica. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Celestica is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8,205  in Celestica on September 14, 2024 and sell it today you would earn a total of  896.00  from holding Celestica or generate 10.92% return on investment over 90 days.

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

Murata Manufacturing  vs.  Celestica

Murata Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Murata Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Celestica

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Murata Manufacturing and Celestica

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

The idea behind Murata Manufacturing and Celestica 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.