Correlation Between Global Lighting and Arcadyan Technology

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

By analyzing existing cross correlation between Global Lighting Technologies and Arcadyan Technology Corp, you can compare the effects of market volatilities on Global Lighting and Arcadyan Technology 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 Global Lighting with a short position of Arcadyan Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Lighting and Arcadyan Technology.

Diversification Opportunities for Global Lighting and Arcadyan Technology

-0.73

Correlation Coefficient

Global Lighting  Arcadyan Technology

Pay attention - limited upside

The 3 months correlation between Global and Arcadyan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Global Lighting Technologies and Arcadyan Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadyan Technology Corp and Global Lighting 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 Global Lighting Technologies are associated (or correlated) with Arcadyan Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadyan Technology Corp has no effect on the direction of Global Lighting i.e., Global Lighting and Arcadyan Technology go up and down completely randomly.

Pair Corralation between Global Lighting and Arcadyan Technology

Assuming the 90 days trading horizon Global Lighting is expected to generate 14.83 times less return on investment than Arcadyan Technology. But when comparing it to its historical volatility, Global Lighting Technologies is 1.18 times less risky than Arcadyan Technology. It trades about 0.01 of its potential returns per unit of risk. Arcadyan Technology Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,100  in Arcadyan Technology Corp on October 23, 2024 and sell it today you would earn a total of  8,000  from holding Arcadyan Technology Corp or generate 79.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Global Lighting Technologies  vs.  Arcadyan Technology Corp

Global Lighting Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Lighting Technologies 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.

Arcadyan Technology Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadyan Technology Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arcadyan Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Lighting and Arcadyan Technology

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

The idea behind Global Lighting Technologies and Arcadyan Technology Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.