Correlation Between Laser Photonics and Crane

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

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

Diversification Opportunities for Laser Photonics and Crane

-0.13

Correlation Coefficient

Laser Photonics  Crane

Good diversification

The 3 months correlation between Laser and Crane is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Laser Photonics and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company and Laser Photonics 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 Laser Photonics are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of Laser Photonics i.e., Laser Photonics and Crane go up and down completely randomly.

Pair Corralation between Laser Photonics and Crane

Given the investment horizon of 90 days Laser Photonics is expected to under-perform the Crane. In addition to that, Laser Photonics is 2.45 times more volatile than Crane Company. It trades about -0.09 of its total potential returns per unit of risk. Crane Company is currently generating about -0.07 per unit of volatility. If you would invest  18,098  in Crane Company on December 2, 2024 and sell it today you would lose (1,799) from holding Crane Company or give up 9.94% of portfolio value over 90 days.

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

Laser Photonics  vs.  Crane Company

Laser Photonics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laser Photonics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Crane Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crane Company has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators 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 Laser Photonics and Crane

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

The idea behind Laser Photonics and Crane Company 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..