Correlation Between Valens and CEVA

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

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

Diversification Opportunities for Valens and CEVA

-0.34

Correlation Coefficient

Valens  CEVA

Very good diversification

The 3 months correlation between Valens and CEVA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Valens and CEVA Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEVA Inc and Valens 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 Valens are associated (or correlated) with CEVA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEVA Inc has no effect on the direction of Valens i.e., Valens and CEVA go up and down completely randomly.

Pair Corralation between Valens and CEVA

Considering the 90-day investment horizon Valens is expected to under-perform the CEVA. In addition to that, Valens is 1.33 times more volatile than CEVA Inc. It trades about -0.01 of its total potential returns per unit of risk. CEVA Inc is currently generating about 0.15 per unit of volatility. If you would invest  2,275  in CEVA Inc on September 2, 2024 and sell it today you would earn a total of  699.00  from holding CEVA Inc or generate 30.73% return on investment over 90 days.

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

Valens  vs.  CEVA Inc

Valens

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valens has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Valens is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CEVA Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEVA Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CEVA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valens and CEVA

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

The idea behind Valens and CEVA 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.