Correlation Between Optotech Corp and Lite On
Can any of the company-specific risk be diversified away by investing in both Optotech Corp and Lite On 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 Optotech Corp and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optotech Corp and Lite On Technology Corp, you can compare the effects of market volatilities on Optotech Corp and Lite On 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 Optotech Corp with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optotech Corp and Lite On.
Diversification Opportunities for Optotech Corp and Lite On
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Optotech and Lite is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Optotech Corp and Lite On Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lite On Technology and Optotech Corp 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 Optotech Corp are associated (or correlated) with Lite On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lite On Technology has no effect on the direction of Optotech Corp i.e., Optotech Corp and Lite On go up and down completely randomly.
Pair Corralation between Optotech Corp and Lite On
Assuming the 90 days trading horizon Optotech Corp is expected to under-perform the Lite On. In addition to that, Optotech Corp is 1.21 times more volatile than Lite On Technology Corp. It trades about -0.2 of its total potential returns per unit of risk. Lite On Technology Corp is currently generating about 0.01 per unit of volatility. 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 |
Optotech Corp vs. Lite On Technology Corp
Performance |
Timeline |
Optotech Corp |
Lite On Technology |
Optotech Corp and Lite On Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Optotech Corp and Lite On
The main advantage of trading using opposite Optotech Corp and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optotech Corp position performs unexpectedly, Lite On 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 Lite On will offset losses from the drop in Lite On's long position.Optotech Corp vs. Everlight Electronics Co | Optotech Corp vs. Winbond Electronics Corp | Optotech Corp vs. Macronix International Co | Optotech Corp vs. Lite On Technology Corp |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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