Correlation Between Lemtech Holdings and S Tech
Can any of the company-specific risk be diversified away by investing in both Lemtech Holdings and S Tech 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 Lemtech Holdings and S Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemtech Holdings Co and S Tech Corp, you can compare the effects of market volatilities on Lemtech Holdings and S Tech 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 Lemtech Holdings with a short position of S Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemtech Holdings and S Tech.
Diversification Opportunities for Lemtech Holdings and S Tech
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lemtech and 1584 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lemtech Holdings Co and S Tech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Tech Corp and Lemtech Holdings 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 Lemtech Holdings Co are associated (or correlated) with S Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Tech Corp has no effect on the direction of Lemtech Holdings i.e., Lemtech Holdings and S Tech go up and down completely randomly.
Pair Corralation between Lemtech Holdings and S Tech
Assuming the 90 days trading horizon Lemtech Holdings Co is expected to under-perform the S Tech. In addition to that, Lemtech Holdings is 3.07 times more volatile than S Tech Corp. It trades about -0.28 of its total potential returns per unit of risk. S Tech Corp is currently generating about 0.07 per unit of volatility. If you would invest 2,695 in S Tech Corp on November 9, 2024 and sell it today you would earn a total of 45.00 from holding S Tech Corp or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemtech Holdings Co vs. S Tech Corp
Performance |
| Timeline |
| Lemtech Holdings |
Risk-Adjusted Performance
OK
Weak | Strong |
| S Tech Corp |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Lemtech Holdings and S Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemtech Holdings and S Tech
The main advantage of trading using opposite Lemtech Holdings and S Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemtech Holdings position performs unexpectedly, S Tech 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 S Tech will offset losses from the drop in S Tech's long position.The idea behind Lemtech Holdings Co and S Tech Corp 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.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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