Correlation Between OSRAM LICHT and Lightbridge
Can any of the company-specific risk be diversified away by investing in both OSRAM LICHT and Lightbridge 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 OSRAM LICHT and Lightbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OSRAM LICHT N and Lightbridge, you can compare the effects of market volatilities on OSRAM LICHT and Lightbridge 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 OSRAM LICHT with a short position of Lightbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of OSRAM LICHT and Lightbridge.
Diversification Opportunities for OSRAM LICHT and Lightbridge
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between OSRAM and Lightbridge is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding OSRAM LICHT N and Lightbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightbridge and OSRAM LICHT 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 OSRAM LICHT N are associated (or correlated) with Lightbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightbridge has no effect on the direction of OSRAM LICHT i.e., OSRAM LICHT and Lightbridge go up and down completely randomly.
Pair Corralation between OSRAM LICHT and Lightbridge
Assuming the 90 days trading horizon OSRAM LICHT is expected to generate 14.6 times less return on investment than Lightbridge. But when comparing it to its historical volatility, OSRAM LICHT N is 87.53 times less risky than Lightbridge. It trades about 0.29 of its potential returns per unit of risk. Lightbridge is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 651.00 in Lightbridge on August 24, 2024 and sell it today you would lose (49.00) from holding Lightbridge or give up 7.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
OSRAM LICHT N vs. Lightbridge
Performance |
| Timeline |
| OSRAM LICHT N |
| Lightbridge |
OSRAM LICHT and Lightbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OSRAM LICHT and Lightbridge
The main advantage of trading using opposite OSRAM LICHT and Lightbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OSRAM LICHT position performs unexpectedly, Lightbridge 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 Lightbridge will offset losses from the drop in Lightbridge's long position.| OSRAM LICHT vs. Australian Agricultural | OSRAM LICHT vs. DAIRY FARM INTL | OSRAM LICHT vs. Sumitomo Mitsui Construction | OSRAM LICHT vs. Hanison Construction Holdings |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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