Correlation Between North American and Light Science
Can any of the company-specific risk be diversified away by investing in both North American and Light Science 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 North American and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The North American and Light Science Technologies, you can compare the effects of market volatilities on North American and Light Science 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 North American with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Light Science.
Diversification Opportunities for North American and Light Science
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and Light is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding The North American and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and North American 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 The North American are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of North American i.e., North American and Light Science go up and down completely randomly.
Pair Corralation between North American and Light Science
Assuming the 90 days trading horizon The North American is expected to generate 0.36 times more return on investment than Light Science. However, The North American is 2.75 times less risky than Light Science. It trades about -0.01 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.09 per unit of risk. If you would invest 33,322 in The North American on October 8, 2024 and sell it today you would lose (122.00) from holding The North American or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The North American vs. Light Science Technologies
Performance |
| Timeline |
| North American |
| Light Science Techno |
North American and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Light Science
The main advantage of trading using opposite North American and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| North American vs. SupplyMe Capital PLC | North American vs. SM Energy Co | North American vs. FuelCell Energy | North American vs. Grand Vision Media |
| Light Science vs. SupplyMe Capital PLC | Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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