Correlation Between Lasertec and Transphorm Technology

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

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

Diversification Opportunities for Lasertec and Transphorm Technology

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Correlation Coefficient

Lasertec  Transphorm Technology

Pay attention - limited upside

The 3 months correlation between Lasertec and Transphorm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lasertec and Transphorm Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transphorm Technology and Lasertec 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 Lasertec are associated (or correlated) with Transphorm Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transphorm Technology has no effect on the direction of Lasertec i.e., Lasertec and Transphorm Technology go up and down completely randomly.

Pair Corralation between Lasertec and Transphorm Technology

Assuming the 90 days horizon Lasertec is expected to under-perform the Transphorm Technology. In addition to that, Lasertec is 3.92 times more volatile than Transphorm Technology. It trades about -0.1 of its total potential returns per unit of risk. Transphorm Technology is currently generating about 0.07 per unit of volatility. If you would invest  491.00  in Transphorm Technology on October 25, 2024 and sell it today you would earn a total of  19.00  from holding Transphorm Technology or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	28.37%
Values	Daily Returns

Lasertec  vs.  Transphorm Technology

Lasertec

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Lasertec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Transphorm Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transphorm Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Transphorm Technology is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lasertec and Transphorm Technology

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

The idea behind Lasertec and Transphorm Technology 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.