Correlation Between Lam Research and Kopin
Can any of the company-specific risk be diversified away by investing in both Lam Research and Kopin 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 Kopin 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 Kopin, you can compare the effects of market volatilities on Lam Research and Kopin 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 Kopin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Research and Kopin.
Diversification Opportunities for Lam Research and Kopin
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lam and Kopin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lam Research Corp and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin 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 Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of Lam Research i.e., Lam Research and Kopin go up and down completely randomly.
Pair Corralation between Lam Research and Kopin
Given the investment horizon of 90 days Lam Research Corp is expected to generate 0.46 times more return on investment than Kopin. However, Lam Research Corp is 2.16 times less risky than Kopin. It trades about 0.05 of its potential returns per unit of risk. Kopin is currently generating about 0.01 per unit of risk. If you would invest 4,331 in Lam Research Corp on August 27, 2024 and sell it today you would earn a total of 2,933 from holding Lam Research Corp or generate 67.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Research Corp vs. Kopin
Performance |
| Timeline |
| Lam Research Corp |
| Kopin |
Lam Research and Kopin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Research and Kopin
The main advantage of trading using opposite Lam Research and Kopin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Research position performs unexpectedly, Kopin 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 Kopin will offset losses from the drop in Kopin's long position.| Lam Research vs. ASML Holding NV | Lam Research vs. KLA Tencor | Lam Research vs. Axcelis Technologies | Lam Research vs. Teradyne |
| Kopin vs. Universal Display | Kopin vs. Daktronics | Kopin vs. KULR Technology Group | Kopin vs. LightPath Technologies |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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