Correlation Between Armm and LENSAR
Can any of the company-specific risk be diversified away by investing in both Armm and LENSAR 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 Armm and LENSAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Armm Inc and LENSAR Inc, you can compare the effects of market volatilities on Armm and LENSAR 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 Armm with a short position of LENSAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armm and LENSAR.
Diversification Opportunities for Armm and LENSAR
Pay attention - limited upside
The 3 months correlation between Armm and LENSAR is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Armm Inc and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Armm 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 Armm Inc are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Armm i.e., Armm and LENSAR go up and down completely randomly.
Pair Corralation between Armm and LENSAR
Given the investment horizon of 90 days Armm Inc is expected to generate 9.48 times more return on investment than LENSAR. However, Armm is 9.48 times more volatile than LENSAR Inc. It trades about 0.04 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.06 per unit of risk. If you would invest 51.00 in Armm Inc on August 24, 2024 and sell it today you would lose (50.91) from holding Armm Inc or give up 99.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Armm Inc vs. LENSAR Inc
Performance |
| Timeline |
| Armm Inc |
| LENSAR Inc |
Armm and LENSAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Armm and LENSAR
The main advantage of trading using opposite Armm and LENSAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armm position performs unexpectedly, LENSAR 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 LENSAR will offset losses from the drop in LENSAR's long position.The idea behind Armm Inc and LENSAR Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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