Correlation Between Tennant and Laser Photonics
Can any of the company-specific risk be diversified away by investing in both Tennant and Laser Photonics 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 Tennant and Laser Photonics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tennant Company and Laser Photonics, you can compare the effects of market volatilities on Tennant and Laser Photonics 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 Tennant with a short position of Laser Photonics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tennant and Laser Photonics.
Diversification Opportunities for Tennant and Laser Photonics
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tennant and Laser is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tennant Company and Laser Photonics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laser Photonics and Tennant 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 Tennant Company are associated (or correlated) with Laser Photonics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laser Photonics has no effect on the direction of Tennant i.e., Tennant and Laser Photonics go up and down completely randomly.
Pair Corralation between Tennant and Laser Photonics
Considering the 90-day investment horizon Tennant is expected to generate 3.25 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Tennant Company is 2.15 times less risky than Laser Photonics. It trades about 0.1 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 476.00 in Laser Photonics on September 5, 2024 and sell it today you would earn a total of 74.00 from holding Laser Photonics or generate 15.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tennant Company vs. Laser Photonics
Performance |
| Timeline |
| Tennant Company |
| Laser Photonics |
Tennant and Laser Photonics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tennant and Laser Photonics
The main advantage of trading using opposite Tennant and Laser Photonics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tennant position performs unexpectedly, Laser Photonics 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 Laser Photonics will offset losses from the drop in Laser Photonics' long position.The idea behind Tennant Company and Laser Photonics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Laser Photonics vs. Nuburu Inc | Laser Photonics vs. JE Cleantech Holdings | Laser Photonics vs. Reelcause | Laser Photonics vs. Shapeways Holdings, Common |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |