Correlation Between LandMark Optoelectronics and Scan D
Can any of the company-specific risk be diversified away by investing in both LandMark Optoelectronics and Scan D 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 LandMark Optoelectronics and Scan D into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LandMark Optoelectronics and Scan D, you can compare the effects of market volatilities on LandMark Optoelectronics and Scan D 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 LandMark Optoelectronics with a short position of Scan D. Check out your portfolio center. Please also check ongoing floating volatility patterns of LandMark Optoelectronics and Scan D.
Diversification Opportunities for LandMark Optoelectronics and Scan D
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LandMark and Scan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding LandMark Optoelectronics and Scan D in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scan D and LandMark Optoelectronics 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 LandMark Optoelectronics are associated (or correlated) with Scan D. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scan D has no effect on the direction of LandMark Optoelectronics i.e., LandMark Optoelectronics and Scan D go up and down completely randomly.
Pair Corralation between LandMark Optoelectronics and Scan D
Assuming the 90 days trading horizon LandMark Optoelectronics is expected to generate 3.73 times more return on investment than Scan D. However, LandMark Optoelectronics is 3.73 times more volatile than Scan D. It trades about 0.1 of its potential returns per unit of risk. Scan D is currently generating about -0.03 per unit of risk. If you would invest 12,629 in LandMark Optoelectronics on October 30, 2024 and sell it today you would earn a total of 40,271 from holding LandMark Optoelectronics or generate 318.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LandMark Optoelectronics vs. Scan D
Performance |
| Timeline |
| LandMark Optoelectronics |
| Scan D |
LandMark Optoelectronics and Scan D Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LandMark Optoelectronics and Scan D
The main advantage of trading using opposite LandMark Optoelectronics and Scan D positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LandMark Optoelectronics position performs unexpectedly, Scan D 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 Scan D will offset losses from the drop in Scan D's long position.The idea behind LandMark Optoelectronics and Scan D 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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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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