Correlation Between Lite On and Coretronic

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

Diversification Opportunities for Lite On and Coretronic

-0.12

Correlation Coefficient

Lite On  Coretronic

Good diversification

The 3 months correlation between Lite and Coretronic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Coretronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coretronic 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 Coretronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coretronic has no effect on the direction of Lite On i.e., Lite On and Coretronic go up and down completely randomly.

Pair Corralation between Lite On and Coretronic

Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 0.66 times more return on investment than Coretronic. However, Lite On Technology Corp is 1.51 times less risky than Coretronic. It trades about 0.02 of its potential returns per unit of risk. Coretronic is currently generating about -0.03 per unit of risk. If you would invest  10,050  in Lite On Technology Corp on December 24, 2024 and sell it today you would earn a total of  100.00  from holding Lite On Technology Corp or generate 1.0% return on investment over 90 days.

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

Lite On Technology Corp  vs.  Coretronic

Lite On Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lite On Technology Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Coretronic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Lite On and Coretronic

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

The idea behind Lite On Technology Corp and Coretronic 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.