Correlation Between Lens Technology and Cansino Biologics

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

Diversification Opportunities for Lens Technology and Cansino Biologics

0.55

Correlation Coefficient

Lens Technology  Cansino Biologics

Very weak diversification

The 3 months correlation between Lens and Cansino is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Lens Technology Co and Cansino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cansino Biologics 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 Cansino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cansino Biologics has no effect on the direction of Lens Technology i.e., Lens Technology and Cansino Biologics go up and down completely randomly.

Pair Corralation between Lens Technology and Cansino Biologics

Assuming the 90 days trading horizon Lens Technology Co is expected to generate 0.85 times more return on investment than Cansino Biologics. However, Lens Technology Co is 1.18 times less risky than Cansino Biologics. It trades about 0.07 of its potential returns per unit of risk. Cansino Biologics is currently generating about -0.04 per unit of risk. If you would invest  1,016  in Lens Technology Co on October 4, 2024 and sell it today you would earn a total of  1,174  from holding Lens Technology Co or generate 115.55% return on investment over 90 days.

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

Lens Technology Co  vs.  Cansino Biologics

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.

Cansino Biologics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cansino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cansino Biologics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lens Technology and Cansino Biologics

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

The idea behind Lens Technology Co and Cansino Biologics 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.