Correlation Between Lemtech Holdings and Solar Applied
Can any of the company-specific risk be diversified away by investing in both Lemtech Holdings and Solar Applied 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 Solar Applied 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 Solar Applied Materials, you can compare the effects of market volatilities on Lemtech Holdings and Solar Applied 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 Solar Applied. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemtech Holdings and Solar Applied.
Diversification Opportunities for Lemtech Holdings and Solar Applied
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lemtech and Solar is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lemtech Holdings Co and Solar Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solar Applied Materials 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 Solar Applied. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solar Applied Materials has no effect on the direction of Lemtech Holdings i.e., Lemtech Holdings and Solar Applied go up and down completely randomly.
Pair Corralation between Lemtech Holdings and Solar Applied
Assuming the 90 days trading horizon Lemtech Holdings Co is expected to generate 0.67 times more return on investment than Solar Applied. However, Lemtech Holdings Co is 1.49 times less risky than Solar Applied. It trades about 0.06 of its potential returns per unit of risk. Solar Applied Materials is currently generating about -0.16 per unit of risk. If you would invest 10,500 in Lemtech Holdings Co on August 24, 2024 and sell it today you would earn a total of 200.00 from holding Lemtech Holdings Co or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemtech Holdings Co vs. Solar Applied Materials
Performance |
| Timeline |
| Lemtech Holdings |
| Solar Applied Materials |
Lemtech Holdings and Solar Applied Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemtech Holdings and Solar Applied
The main advantage of trading using opposite Lemtech Holdings and Solar Applied positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemtech Holdings position performs unexpectedly, Solar Applied 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 Solar Applied will offset losses from the drop in Solar Applied's long position.| Lemtech Holdings vs. Primax Electronics | Lemtech Holdings vs. Nishoku Technology | Lemtech Holdings vs. Shin Zu Shing | Lemtech Holdings vs. Generalplus Technology |
| Solar Applied vs. Wafer Works | Solar Applied vs. Sino American Silicon Products | Solar Applied vs. StShine Optical Co | Solar Applied vs. Phison Electronics |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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