Correlation Between Hollysys Automation and Lightbridge Corp

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

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

Diversification Opportunities for Hollysys Automation and Lightbridge Corp

-0.12

Correlation Coefficient

Hollysys Automation  Lightbridge Corp

Good diversification

The 3 months correlation between Hollysys and Lightbridge is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hollysys Automation Technologi and Lightbridge Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lightbridge Corp and Hollysys Automation 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 Hollysys Automation Technologies are associated (or correlated) with Lightbridge Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lightbridge Corp has no effect on the direction of Hollysys Automation i.e., Hollysys Automation and Lightbridge Corp go up and down completely randomly.

Pair Corralation between Hollysys Automation and Lightbridge Corp

Given the investment horizon of 90 days Hollysys Automation is expected to generate 2.51 times less return on investment than Lightbridge Corp. But when comparing it to its historical volatility, Hollysys Automation Technologies is 3.66 times less risky than Lightbridge Corp. It trades about 0.06 of its potential returns per unit of risk. Lightbridge Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Lightbridge Corp on October 21, 2024 and sell it today you would earn a total of  150.00  from holding Lightbridge Corp or generate 35.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.6%
Values	Daily Returns

Hollysys Automation Technologi  vs.  Lightbridge Corp

Hollysys Automation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollysys Automation Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Hollysys Automation is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Lightbridge Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lightbridge Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Hollysys Automation and Lightbridge Corp

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

The idea behind Hollysys Automation Technologies and Lightbridge 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 Transaction History module to view history of all your transactions and understand their impact on performance.