Correlation Between Lite On and Macronix International

Can any of the company-specific risk be diversified away by investing in both Lite On and Macronix International 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 Lite On and Macronix International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lite On Technology Corp and Macronix International Co, you can compare the effects of market volatilities on Lite On and Macronix International 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 Lite On with a short position of Macronix International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Macronix International.

Diversification Opportunities for Lite On and Macronix International

-0.56

Correlation Coefficient

Lite On  Macronix International

Excellent diversification

The 3 months correlation between Lite and Macronix is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Macronix International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macronix International and Lite On 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 Lite On Technology Corp are associated (or correlated) with Macronix International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macronix International has no effect on the direction of Lite On i.e., Lite On and Macronix International go up and down completely randomly.

Pair Corralation between Lite On and Macronix International

Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 0.68 times more return on investment than Macronix International. However, Lite On Technology Corp is 1.47 times less risky than Macronix International. It trades about 0.01 of its potential returns per unit of risk. Macronix International Co is currently generating about -0.18 per unit of risk. If you would invest  10,150  in Lite On Technology Corp on September 15, 2024 and sell it today you would earn a total of  50.00  from holding Lite On Technology Corp or generate 0.49% return on investment over 90 days.

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

Lite On Technology Corp  vs.  Macronix International Co

Lite On Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lite On Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lite On is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Macronix International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macronix International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lite On and Macronix International

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

The idea behind Lite On Technology Corp and Macronix International Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.