Correlation Between NLIGHT and Diodes Incorporated
Can any of the company-specific risk be diversified away by investing in both NLIGHT and Diodes Incorporated 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 NLIGHT and Diodes Incorporated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between nLIGHT Inc and Diodes Incorporated, you can compare the effects of market volatilities on NLIGHT and Diodes Incorporated 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 NLIGHT with a short position of Diodes Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLIGHT and Diodes Incorporated.
Diversification Opportunities for NLIGHT and Diodes Incorporated
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between NLIGHT and Diodes is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc and Diodes Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diodes Incorporated and NLIGHT 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 nLIGHT Inc are associated (or correlated) with Diodes Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diodes Incorporated has no effect on the direction of NLIGHT i.e., NLIGHT and Diodes Incorporated go up and down completely randomly.
Pair Corralation between NLIGHT and Diodes Incorporated
Given the investment horizon of 90 days nLIGHT Inc is expected to generate 1.66 times more return on investment than Diodes Incorporated. However, NLIGHT is 1.66 times more volatile than Diodes Incorporated. It trades about 0.15 of its potential returns per unit of risk. Diodes Incorporated is currently generating about -0.01 per unit of risk. If you would invest 1,009 in nLIGHT Inc on October 21, 2024 and sell it today you would earn a total of 101.00 from holding nLIGHT Inc or generate 10.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
nLIGHT Inc vs. Diodes Incorporated
Performance |
| Timeline |
| nLIGHT Inc |
| Diodes Incorporated |
NLIGHT and Diodes Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NLIGHT and Diodes Incorporated
The main advantage of trading using opposite NLIGHT and Diodes Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLIGHT position performs unexpectedly, Diodes Incorporated 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 Diodes Incorporated will offset losses from the drop in Diodes Incorporated's long position.The idea behind nLIGHT Inc and Diodes Incorporated 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.| Diodes Incorporated vs. Silicon Laboratories | Diodes Incorporated vs. MACOM Technology Solutions | Diodes Incorporated vs. FormFactor | Diodes Incorporated vs. Amkor Technology |
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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