Correlation Between Lite On and Optotech Corp
Can any of the company-specific risk be diversified away by investing in both Lite On and Optotech Corp 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 Lite On and Optotech Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lite On Technology Corp and Optotech Corp, you can compare the effects of market volatilities on Lite On and Optotech Corp 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 Lite On with a short position of Optotech Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Optotech Corp.
Diversification Opportunities for Lite On and Optotech Corp
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lite and Optotech is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Optotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optotech Corp and Lite On 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 Lite On Technology Corp are associated (or correlated) with Optotech Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optotech Corp has no effect on the direction of Lite On i.e., Lite On and Optotech Corp go up and down completely randomly.
Pair Corralation between Lite On and Optotech Corp
Assuming the 90 days trading horizon Lite On is expected to generate 3.26 times less return on investment than Optotech Corp. But when comparing it to its historical volatility, Lite On Technology Corp is 3.58 times less risky than Optotech Corp. It trades about 0.21 of its potential returns per unit of risk. Optotech Corp is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,655 in Optotech Corp on November 28, 2024 and sell it today you would earn a total of 330.00 from holding Optotech Corp or generate 12.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lite On Technology Corp vs. Optotech Corp
Performance |
| Timeline |
| Lite On Technology |
| Optotech Corp |
Lite On and Optotech Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Optotech Corp
The main advantage of trading using opposite Lite On and Optotech Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Optotech Corp 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 Optotech Corp will offset losses from the drop in Optotech Corp's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Optotech Corp vs. Everlight Electronics Co | Optotech Corp vs. Winbond Electronics Corp | Optotech Corp vs. Macronix International Co | Optotech Corp vs. Lite On Technology Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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