Correlation Between LightPath Technologies and Sanmina

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

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

Diversification Opportunities for LightPath Technologies and Sanmina

0.25

Correlation Coefficient

LightPath Technologies  Sanmina

Modest diversification

The 3 months correlation between LightPath and Sanmina is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Sanmina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanmina 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 Sanmina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanmina has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Sanmina go up and down completely randomly.

Pair Corralation between LightPath Technologies and Sanmina

Given the investment horizon of 90 days LightPath Technologies is expected to generate 5.3 times more return on investment than Sanmina. However, LightPath Technologies is 5.3 times more volatile than Sanmina. It trades about 0.43 of its potential returns per unit of risk. Sanmina is currently generating about -0.2 per unit of risk. If you would invest  160.00  in LightPath Technologies on October 7, 2024 and sell it today you would earn a total of  254.00  from holding LightPath Technologies or generate 158.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LightPath Technologies  vs.  Sanmina

LightPath Technologies

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 26 (%) 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.

Sanmina

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanmina are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Sanmina displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LightPath Technologies and Sanmina

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

The idea behind LightPath Technologies and Sanmina 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.