Correlation Between LASSONDE INDUSTINC and Ribbon Communications

Can any of the company-specific risk be diversified away by investing in both LASSONDE INDUSTINC and Ribbon Communications 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 LASSONDE INDUSTINC and Ribbon Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LASSONDE INDUSTINC A and Ribbon Communications, you can compare the effects of market volatilities on LASSONDE INDUSTINC and Ribbon Communications 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 LASSONDE INDUSTINC with a short position of Ribbon Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of LASSONDE INDUSTINC and Ribbon Communications.

Diversification Opportunities for LASSONDE INDUSTINC and Ribbon Communications

0.44

Correlation Coefficient

LASSONDE INDUSTINC  Ribbon Communications

Very weak diversification

The 3 months correlation between LASSONDE and Ribbon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LASSONDE INDUSTINC A and Ribbon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ribbon Communications and LASSONDE INDUSTINC 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 LASSONDE INDUSTINC A are associated (or correlated) with Ribbon Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ribbon Communications has no effect on the direction of LASSONDE INDUSTINC i.e., LASSONDE INDUSTINC and Ribbon Communications go up and down completely randomly.

Pair Corralation between LASSONDE INDUSTINC and Ribbon Communications

Assuming the 90 days horizon LASSONDE INDUSTINC A is expected to generate 0.64 times more return on investment than Ribbon Communications. However, LASSONDE INDUSTINC A is 1.57 times less risky than Ribbon Communications. It trades about 0.09 of its potential returns per unit of risk. Ribbon Communications is currently generating about -0.01 per unit of risk. If you would invest  11,532  in LASSONDE INDUSTINC A on December 30, 2024 and sell it today you would earn a total of  1,368  from holding LASSONDE INDUSTINC A or generate 11.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

LASSONDE INDUSTINC A  vs.  Ribbon Communications

LASSONDE INDUSTINC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LASSONDE INDUSTINC A are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, LASSONDE INDUSTINC reported solid returns over the last few months and may actually be approaching a breakup point.

Ribbon Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ribbon Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ribbon Communications is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LASSONDE INDUSTINC and Ribbon Communications

The main advantage of trading using opposite LASSONDE INDUSTINC and Ribbon Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LASSONDE INDUSTINC position performs unexpectedly, Ribbon Communications 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 Ribbon Communications will offset losses from the drop in Ribbon Communications' long position.

The idea behind LASSONDE INDUSTINC A and Ribbon Communications 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.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.