Correlation Between LightPath Technologies and Meta Materials

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

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

Diversification Opportunities for LightPath Technologies and Meta Materials

-0.71

Correlation Coefficient

LightPath Technologies  Meta Materials

Pay attention - limited upside

The 3 months correlation between LightPath and Meta is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Meta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Materials and LightPath Technologies 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 LightPath Technologies are associated (or correlated) with Meta Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Materials has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Meta Materials go up and down completely randomly.

Pair Corralation between LightPath Technologies and Meta Materials

Given the investment horizon of 90 days LightPath Technologies is expected to generate 8.95 times less return on investment than Meta Materials. But when comparing it to its historical volatility, LightPath Technologies is 18.8 times less risky than Meta Materials. It trades about 0.26 of its potential returns per unit of risk. Meta Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6.10  in Meta Materials on September 12, 2024 and sell it today you would lose (6.09) from holding Meta Materials or give up 99.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.36%
Values	Daily Returns

LightPath Technologies  vs.  Meta Materials

LightPath Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, LightPath Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Meta Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Meta Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LightPath Technologies and Meta Materials

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

The idea behind LightPath Technologies and Meta Materials 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.