Correlation Between Lens Technology and Ingenic Semiconductor

Can any of the company-specific risk be diversified away by investing in both Lens Technology and Ingenic Semiconductor 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 Lens Technology and Ingenic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Lens Technology and Ingenic Semiconductor

0.89

Correlation Coefficient

Lens Technology  Ingenic Semiconductor

Very poor diversification

The 3 months correlation between Lens and Ingenic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Lens Technology Co and Ingenic Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingenic Semiconductor and Lens Technology 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 Lens Technology Co are associated (or correlated) with Ingenic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingenic Semiconductor has no effect on the direction of Lens Technology i.e., Lens Technology and Ingenic Semiconductor go up and down completely randomly.

Pair Corralation between Lens Technology and Ingenic Semiconductor

Assuming the 90 days trading horizon Lens Technology Co is expected to generate 0.6 times more return on investment than Ingenic Semiconductor. However, Lens Technology Co is 1.67 times less risky than Ingenic Semiconductor. It trades about 0.03 of its potential returns per unit of risk. Ingenic Semiconductor is currently generating about -0.01 per unit of risk. If you would invest  2,171  in Lens Technology Co on October 3, 2024 and sell it today you would earn a total of  19.00  from holding Lens Technology Co or generate 0.88% return on investment over 90 days.

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

Lens Technology Co  vs.  Ingenic Semiconductor

Lens Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lens Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ingenic Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ingenic Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Lens Technology and Ingenic Semiconductor

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

The idea behind Lens Technology Co and Ingenic Semiconductor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.