Correlation Between LightPath Technologies and Interlink Electronics
Can any of the company-specific risk be diversified away by investing in both LightPath Technologies and Interlink Electronics 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 LightPath Technologies and Interlink Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LightPath Technologies and Interlink Electronics, you can compare the effects of market volatilities on LightPath Technologies and Interlink Electronics 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 LightPath Technologies with a short position of Interlink Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LightPath Technologies and Interlink Electronics.
Diversification Opportunities for LightPath Technologies and Interlink Electronics
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between LightPath and Interlink is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Interlink Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interlink Electronics and LightPath Technologies 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 LightPath Technologies are associated (or correlated) with Interlink Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interlink Electronics has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Interlink Electronics go up and down completely randomly.
Pair Corralation between LightPath Technologies and Interlink Electronics
Given the investment horizon of 90 days LightPath Technologies is expected to generate 0.84 times more return on investment than Interlink Electronics. However, LightPath Technologies is 1.19 times less risky than Interlink Electronics. It trades about 0.03 of its potential returns per unit of risk. Interlink Electronics is currently generating about 0.01 per unit of risk. If you would invest 115.00 in LightPath Technologies on August 27, 2024 and sell it today you would earn a total of 34.00 from holding LightPath Technologies or generate 29.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.79% |
| Values | Daily Returns |
LightPath Technologies vs. Interlink Electronics
Performance |
| Timeline |
| LightPath Technologies |
| Interlink Electronics |
LightPath Technologies and Interlink Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LightPath Technologies and Interlink Electronics
The main advantage of trading using opposite LightPath Technologies and Interlink Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LightPath Technologies position performs unexpectedly, Interlink Electronics 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 Interlink Electronics will offset losses from the drop in Interlink Electronics' long position.| LightPath Technologies vs. Methode Electronics | LightPath Technologies vs. OSI Systems | LightPath Technologies vs. Plexus Corp | LightPath Technologies vs. CTS Corporation |
| Interlink Electronics vs. Methode Electronics | Interlink Electronics vs. Bel Fuse A | Interlink Electronics vs. CTS Corporation | Interlink Electronics vs. MicroCloud Hologram |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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