Correlation Between Cepton and Know Labs

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

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

Diversification Opportunities for Cepton and Know Labs

-0.72

Correlation Coefficient

Cepton  Know Labs

Pay attention - limited upside

The 3 months correlation between Cepton and Know is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cepton Inc and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs and Cepton 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 Cepton Inc are associated (or correlated) with Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Cepton i.e., Cepton and Know Labs go up and down completely randomly.

Pair Corralation between Cepton and Know Labs

Given the investment horizon of 90 days Cepton Inc is expected to generate 0.1 times more return on investment than Know Labs. However, Cepton Inc is 10.12 times less risky than Know Labs. It trades about 0.08 of its potential returns per unit of risk. Know Labs is currently generating about -0.06 per unit of risk. If you would invest  305.00  in Cepton Inc on August 27, 2024 and sell it today you would earn a total of  7.00  from holding Cepton Inc or generate 2.3% return on investment over 90 days.

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

Cepton Inc  vs.  Know Labs

Cepton Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cepton Inc are ranked lower than 6 (%) 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.

Know Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Know Labs 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 stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Cepton and Know Labs

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

The idea behind Cepton Inc and Know Labs 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.