Correlation Between Lasertec and Veeco Instruments
Can any of the company-specific risk be diversified away by investing in both Lasertec and Veeco Instruments 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 Lasertec and Veeco Instruments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lasertec and Veeco Instruments, you can compare the effects of market volatilities on Lasertec and Veeco Instruments 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 Lasertec with a short position of Veeco Instruments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lasertec and Veeco Instruments.
Diversification Opportunities for Lasertec and Veeco Instruments
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lasertec and Veeco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Lasertec and Veeco Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veeco Instruments and Lasertec 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 Lasertec are associated (or correlated) with Veeco Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veeco Instruments has no effect on the direction of Lasertec i.e., Lasertec and Veeco Instruments go up and down completely randomly.
Pair Corralation between Lasertec and Veeco Instruments
Assuming the 90 days horizon Lasertec is expected to generate 0.54 times more return on investment than Veeco Instruments. However, Lasertec is 1.87 times less risky than Veeco Instruments. It trades about 0.24 of its potential returns per unit of risk. Veeco Instruments is currently generating about -0.09 per unit of risk. If you would invest 9,702 in Lasertec on November 3, 2024 and sell it today you would earn a total of 828.00 from holding Lasertec or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Lasertec vs. Veeco Instruments
Performance |
| Timeline |
| Lasertec |
| Veeco Instruments |
Lasertec and Veeco Instruments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lasertec and Veeco Instruments
The main advantage of trading using opposite Lasertec and Veeco Instruments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lasertec position performs unexpectedly, Veeco Instruments 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 Veeco Instruments will offset losses from the drop in Veeco Instruments' long position.| Lasertec vs. Sumco Corp ADR | Lasertec vs. Asm Pacific Technology | Lasertec vs. Disco Corp ADR | Lasertec vs. Tokyo Electron |
| Veeco Instruments vs. NVE Corporation | Veeco Instruments vs. Photronics | Veeco Instruments vs. Kulicke and Soffa | Veeco Instruments vs. Alvarium Tiedemann Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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