Correlation Between ThinTech Materials and LandMark Optoelectronics

Can any of the company-specific risk be diversified away by investing in both ThinTech Materials and LandMark Optoelectronics 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 ThinTech Materials and LandMark Optoelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for ThinTech Materials and LandMark Optoelectronics

-0.58

Correlation Coefficient

ThinTech Materials  LandMark Optoelectronics

Excellent diversification

The 3 months correlation between ThinTech and LandMark is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ThinTech Materials Technology and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics and ThinTech Materials 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 ThinTech Materials Technology are associated (or correlated) with LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of ThinTech Materials i.e., ThinTech Materials and LandMark Optoelectronics go up and down completely randomly.

Pair Corralation between ThinTech Materials and LandMark Optoelectronics

Assuming the 90 days trading horizon ThinTech Materials is expected to generate 2.17 times less return on investment than LandMark Optoelectronics. But when comparing it to its historical volatility, ThinTech Materials Technology is 1.13 times less risky than LandMark Optoelectronics. It trades about 0.07 of its potential returns per unit of risk. LandMark Optoelectronics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  9,785  in LandMark Optoelectronics on October 24, 2024 and sell it today you would earn a total of  40,315  from holding LandMark Optoelectronics or generate 412.01% return on investment over 90 days.

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

ThinTech Materials Technology  vs.  LandMark Optoelectronics

ThinTech Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ThinTech Materials Technology 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

LandMark Optoelectronics

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LandMark Optoelectronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LandMark Optoelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ThinTech Materials and LandMark Optoelectronics

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

The idea behind ThinTech Materials Technology and LandMark Optoelectronics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.