Correlation Between Astar and Light Science
Can any of the company-specific risk be diversified away by investing in both Astar and Light Science 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 Astar and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and Light Science Technologies, you can compare the effects of market volatilities on Astar and Light Science 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 Astar with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and Light Science.
Diversification Opportunities for Astar and Light Science
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Astar and Light is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and Astar 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 Astar are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Astar i.e., Astar and Light Science go up and down completely randomly.
Pair Corralation between Astar and Light Science
Assuming the 90 days trading horizon Astar is expected to under-perform the Light Science. In addition to that, Astar is 1.9 times more volatile than Light Science Technologies. It trades about -0.08 of its total potential returns per unit of risk. Light Science Technologies is currently generating about -0.05 per unit of volatility. If you would invest 290.00 in Light Science Technologies on October 10, 2024 and sell it today you would lose (10.00) from holding Light Science Technologies or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Astar vs. Light Science Technologies
Performance |
| Timeline |
| Astar |
| Light Science Techno |
Astar and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and Light Science
The main advantage of trading using opposite Astar and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.The idea behind Astar and Light Science Technologies 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.| Light Science vs. Zegona Communications Plc | Light Science vs. Naked Wines plc | Light Science vs. Infrastrutture Wireless Italiane | Light Science vs. Orient Telecoms |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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