Correlation Between LENSAR and Dixons Carphone

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

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

Diversification Opportunities for LENSAR and Dixons Carphone

0.16

Correlation Coefficient

LENSAR  Dixons Carphone

Average diversification

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

Pair Corralation between LENSAR and Dixons Carphone

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.53 times more return on investment than Dixons Carphone. However, LENSAR is 1.53 times more volatile than Dixons Carphone plc. It trades about 0.07 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.03 per unit of risk. If you would invest  316.00  in LENSAR Inc on October 24, 2024 and sell it today you would earn a total of  531.00  from holding LENSAR Inc or generate 168.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

LENSAR Inc  vs.  Dixons Carphone plc

LENSAR Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 15 (%) 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.

Dixons Carphone plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dixons Carphone plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dixons Carphone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LENSAR and Dixons Carphone

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

The idea behind LENSAR Inc and Dixons Carphone plc 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 Global Correlations module to find global opportunities by holding instruments from different markets.