Correlation Between Lite On and Catcher Technology

Can any of the company-specific risk be diversified away by investing in both Lite On and Catcher Technology 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 Catcher Technology 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 Catcher Technology Co, you can compare the effects of market volatilities on Lite On and Catcher Technology 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 Catcher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Catcher Technology.

Diversification Opportunities for Lite On and Catcher Technology

-0.45

Correlation Coefficient

Lite On  Catcher Technology

Very good diversification

The 3 months correlation between Lite and Catcher is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology 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 Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of Lite On i.e., Lite On and Catcher Technology go up and down completely randomly.

Pair Corralation between Lite On and Catcher Technology

Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 1.13 times more return on investment than Catcher Technology. However, Lite On is 1.13 times more volatile than Catcher Technology Co. It trades about -0.01 of its potential returns per unit of risk. Catcher Technology Co is currently generating about -0.09 per unit of risk. If you would invest  10,800  in Lite On Technology Corp on September 15, 2024 and sell it today you would lose (600.00) from holding Lite On Technology Corp or give up 5.56% of portfolio value 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.  Catcher Technology 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.

Catcher Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catcher Technology 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 Catcher Technology

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

The idea behind Lite On Technology Corp and Catcher Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.