Correlation Between CEVA and Alpha

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

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

Diversification Opportunities for CEVA and Alpha

-0.15

Correlation Coefficient

CEVA  Alpha

Good diversification

The 3 months correlation between CEVA and Alpha is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding CEVA Inc and Alpha and Omega in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha and Omega and CEVA 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 CEVA Inc are associated (or correlated) with Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha and Omega has no effect on the direction of CEVA i.e., CEVA and Alpha go up and down completely randomly.

Pair Corralation between CEVA and Alpha

Given the investment horizon of 90 days CEVA Inc is expected to under-perform the Alpha. But the stock apears to be less risky and, when comparing its historical volatility, CEVA Inc is 1.58 times less risky than Alpha. The stock trades about -0.06 of its potential returns per unit of risk. The Alpha and Omega is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,181  in Alpha and Omega on February 23, 2024 and sell it today you would earn a total of  559.00  from holding Alpha and Omega or generate 25.63% return on investment over 90 days.

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

CEVA Inc  vs.  Alpha and Omega

CEVA Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEVA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alpha and Omega

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha and Omega are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Alpha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEVA and Alpha

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

The idea behind CEVA Inc and Alpha and Omega 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.