Correlation Between Lemonade and Advantest
Can any of the company-specific risk be diversified away by investing in both Lemonade and Advantest 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 Lemonade and Advantest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and Advantest, you can compare the effects of market volatilities on Lemonade and Advantest 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 Lemonade with a short position of Advantest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and Advantest.
Diversification Opportunities for Lemonade and Advantest
Very poor diversification
The 3 months correlation between Lemonade and Advantest is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Advantest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantest and Lemonade 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 Lemonade are associated (or correlated) with Advantest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantest has no effect on the direction of Lemonade i.e., Lemonade and Advantest go up and down completely randomly.
Pair Corralation between Lemonade and Advantest
Given the investment horizon of 90 days Lemonade is expected to generate 2.53 times more return on investment than Advantest. However, Lemonade is 2.53 times more volatile than Advantest. It trades about 0.58 of its potential returns per unit of risk. Advantest is currently generating about 0.28 per unit of risk. If you would invest 1,864 in Lemonade on August 27, 2024 and sell it today you would earn a total of 3,238 from holding Lemonade or generate 173.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemonade vs. Advantest
Performance |
| Timeline |
| Lemonade |
| Advantest |
Lemonade and Advantest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and Advantest
The main advantage of trading using opposite Lemonade and Advantest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade position performs unexpectedly, Advantest 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 Advantest will offset losses from the drop in Advantest's long position.| Lemonade vs. Fiverr International | Lemonade vs. Pinterest | Lemonade vs. Upstart Holdings | Lemonade vs. Fastly Inc |
| Advantest vs. Tokyo Electron | Advantest vs. Ultra Clean Holdings | Advantest vs. Applied Materials | Advantest vs. Sumco Corp ADR |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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