Correlation Between Optotech Corp and Bright Led
Can any of the company-specific risk be diversified away by investing in both Optotech Corp and Bright Led 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 Optotech Corp and Bright Led into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optotech Corp and Bright Led Electronics, you can compare the effects of market volatilities on Optotech Corp and Bright Led 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 Optotech Corp with a short position of Bright Led. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optotech Corp and Bright Led.
Diversification Opportunities for Optotech Corp and Bright Led
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Optotech and Bright is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Optotech Corp and Bright Led Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Led Electronics and Optotech Corp 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 Optotech Corp are associated (or correlated) with Bright Led. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Led Electronics has no effect on the direction of Optotech Corp i.e., Optotech Corp and Bright Led go up and down completely randomly.
Pair Corralation between Optotech Corp and Bright Led
Assuming the 90 days trading horizon Optotech Corp is expected to under-perform the Bright Led. But the stock apears to be less risky and, when comparing its historical volatility, Optotech Corp is 1.29 times less risky than Bright Led. The stock trades about -0.1 of its potential returns per unit of risk. The Bright Led Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,975 in Bright Led Electronics on October 26, 2024 and sell it today you would earn a total of 280.00 from holding Bright Led Electronics or generate 14.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optotech Corp vs. Bright Led Electronics
Performance |
| Timeline |
| Optotech Corp |
| Bright Led Electronics |
Optotech Corp and Bright Led Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optotech Corp and Bright Led
The main advantage of trading using opposite Optotech Corp and Bright Led positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optotech Corp position performs unexpectedly, Bright Led 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 Bright Led will offset losses from the drop in Bright Led's long position.| 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 |
| Bright Led vs. Everlight Electronics Co | Bright Led vs. Harvatek Corp | Bright Led vs. Optotech Corp | Bright Led vs. I Chiun Precision Industry |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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