Correlation Between Comtech Telecommunicatio and Lantronix

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

By analyzing existing cross correlation between Comtech Telecommunications Corp and Lantronix, you can compare the effects of market volatilities on Comtech Telecommunicatio and Lantronix 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 Comtech Telecommunicatio with a short position of Lantronix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comtech Telecommunicatio and Lantronix.

Diversification Opportunities for Comtech Telecommunicatio and Lantronix

0.73

Correlation Coefficient

Comtech Telecommunicatio  Lantronix

Poor diversification

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

Pair Corralation between Comtech Telecommunicatio and Lantronix

Given the investment horizon of 90 days Comtech Telecommunications Corp is expected to under-perform the Lantronix. In addition to that, Comtech Telecommunicatio is 1.86 times more volatile than Lantronix. It trades about -0.12 of its total potential returns per unit of risk. Lantronix is currently generating about -0.14 per unit of volatility. If you would invest  408.00  in Lantronix on December 30, 2024 and sell it today you would lose (156.00) from holding Lantronix or give up 38.24% of portfolio value over 90 days.

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

Comtech Telecommunications Cor  vs.  Lantronix

Comtech Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lantronix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Comtech Telecommunicatio and Lantronix

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

The idea behind Comtech Telecommunications Corp and Lantronix 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 Transaction History module to view history of all your transactions and understand their impact on performance.