Correlation Between Lam Research and InTest
Can any of the company-specific risk be diversified away by investing in both Lam Research and InTest 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 Lam Research and InTest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Research Corp and inTest, you can compare the effects of market volatilities on Lam Research and InTest 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 Lam Research with a short position of InTest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and InTest.
Diversification Opportunities for Lam Research and InTest
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lam and InTest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and inTest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on inTest and Lam Research 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 Lam Research Corp are associated (or correlated) with InTest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of inTest has no effect on the direction of Lam Research i.e., Lam Research and InTest go up and down completely randomly.
Pair Corralation between Lam Research and InTest
Given the investment horizon of 90 days Lam Research is expected to generate 1.87 times less return on investment than InTest. But when comparing it to its historical volatility, Lam Research Corp is 1.41 times less risky than InTest. It trades about 0.12 of its potential returns per unit of risk. inTest is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 777.00 in inTest on October 25, 2024 and sell it today you would earn a total of 160.00 from holding inTest or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Research Corp vs. inTest
Performance |
| Timeline |
| Lam Research Corp |
| inTest |
Lam Research and InTest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and InTest
The main advantage of trading using opposite Lam Research and InTest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research position performs unexpectedly, InTest 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 InTest will offset losses from the drop in InTest's long position.| Lam Research vs. Ultra Clean Holdings | Lam Research vs. Veeco Instruments | Lam Research vs. Cohu Inc | Lam Research vs. Onto Innovation |
| InTest vs. Axcelis Technologies | InTest vs. Lam Research Corp | InTest vs. Photronics | InTest vs. indie Semiconductor |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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