Correlation Between Overstock and Light Science
Can any of the company-specific risk be diversified away by investing in both Overstock and Light Science 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 Overstock and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Overstock and Light Science Technologies, you can compare the effects of market volatilities on Overstock and Light Science 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 Overstock with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Overstock and Light Science.
Diversification Opportunities for Overstock and Light Science
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Overstock and Light is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Overstock and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and Overstock 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 Overstock are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Overstock i.e., Overstock and Light Science go up and down completely randomly.
Pair Corralation between Overstock and Light Science
Assuming the 90 days trading horizon Overstock is expected to under-perform the Light Science. In addition to that, Overstock is 1.29 times more volatile than Light Science Technologies. It trades about -0.07 of its total potential returns per unit of risk. Light Science Technologies is currently generating about 0.04 per unit of volatility. If you would invest 236.00 in Light Science Technologies on December 11, 2024 and sell it today you would earn a total of 44.00 from holding Light Science Technologies or generate 18.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.54% |
| Values | Daily Returns |
Overstock vs. Light Science Technologies
Performance |
| Timeline |
| Overstock |
| Light Science Techno |
Overstock and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Overstock and Light Science
The main advantage of trading using opposite Overstock and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Overstock position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Overstock vs. Bloomsbury Publishing Plc | ||
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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