Correlation Between Ecovyst and LENSAR

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

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

Diversification Opportunities for Ecovyst and LENSAR

-0.16

Correlation Coefficient

Ecovyst  LENSAR

Good diversification

The 3 months correlation between Ecovyst and LENSAR is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ecovyst and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Ecovyst 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 Ecovyst are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Ecovyst i.e., Ecovyst and LENSAR go up and down completely randomly.

Pair Corralation between Ecovyst and LENSAR

Given the investment horizon of 90 days Ecovyst is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, Ecovyst is 2.06 times less risky than LENSAR. The stock trades about -0.02 of its potential returns per unit of risk. The LENSAR Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  318.00  in LENSAR Inc on December 4, 2024 and sell it today you would earn a total of  1,112  from holding LENSAR Inc or generate 349.69% return on investment over 90 days.

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

Ecovyst  vs.  LENSAR Inc

Ecovyst

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecovyst has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LENSAR Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecovyst and LENSAR

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

The idea behind Ecovyst and LENSAR Inc 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.