Correlation Between Sono Tek and Coherent
Can any of the company-specific risk be diversified away by investing in both Sono Tek and Coherent 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 Sono Tek and Coherent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sono Tek Corp and Coherent, you can compare the effects of market volatilities on Sono Tek and Coherent 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 Sono Tek with a short position of Coherent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sono Tek and Coherent.
Diversification Opportunities for Sono Tek and Coherent
Very weak diversification
The 3 months correlation between Sono and Coherent is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sono Tek Corp and Coherent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coherent and Sono Tek 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 Sono Tek Corp are associated (or correlated) with Coherent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coherent has no effect on the direction of Sono Tek i.e., Sono Tek and Coherent go up and down completely randomly.
Pair Corralation between Sono Tek and Coherent
Given the investment horizon of 90 days Sono Tek is expected to generate 10.93 times less return on investment than Coherent. But when comparing it to its historical volatility, Sono Tek Corp is 1.23 times less risky than Coherent. It trades about 0.01 of its potential returns per unit of risk. Coherent is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,017 in Coherent on October 22, 2024 and sell it today you would earn a total of 2,812 from holding Coherent or generate 40.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sono Tek Corp vs. Coherent
Performance |
| Timeline |
| Sono Tek Corp |
| Coherent |
Sono Tek and Coherent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sono Tek and Coherent
The main advantage of trading using opposite Sono Tek and Coherent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sono Tek position performs unexpectedly, Coherent 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 Coherent will offset losses from the drop in Coherent's long position.| Sono Tek vs. Novanta | Sono Tek vs. ESCO Technologies | Sono Tek vs. Vontier Corp | Sono Tek vs. Sensata Technologies Holding |
| Coherent vs. MKS Instruments | Coherent vs. IPG Photonics | Coherent vs. Cognex | Coherent vs. Lumentum 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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