Correlation Between Lite On and Arbor Technology
Can any of the company-specific risk be diversified away by investing in both Lite On and Arbor Technology 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 Arbor Technology 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 Arbor Technology, you can compare the effects of market volatilities on Lite On and Arbor Technology 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 Arbor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Arbor Technology.
Diversification Opportunities for Lite On and Arbor Technology
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lite and Arbor is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Arbor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Technology 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 Arbor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Technology has no effect on the direction of Lite On i.e., Lite On and Arbor Technology go up and down completely randomly.
Pair Corralation between Lite On and Arbor Technology
Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 0.94 times more return on investment than Arbor Technology. However, Lite On Technology Corp is 1.06 times less risky than Arbor Technology. It trades about 0.06 of its potential returns per unit of risk. Arbor Technology is currently generating about 0.05 per unit of risk. If you would invest 6,027 in Lite On Technology Corp on August 30, 2024 and sell it today you would earn a total of 4,423 from holding Lite On Technology Corp or generate 73.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lite On Technology Corp vs. Arbor Technology
Performance |
| Timeline |
| Lite On Technology |
| Arbor Technology |
Lite On and Arbor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Arbor Technology
The main advantage of trading using opposite Lite On and Arbor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Arbor Technology 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 Arbor Technology will offset losses from the drop in Arbor Technology's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Arbor Technology vs. Advantech Co | Arbor Technology vs. Asustek Computer | Arbor Technology vs. Lite On Technology Corp | Arbor Technology vs. Micro Star International Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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