Correlation Between Light Science and Concurrent Technologies

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

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

Diversification Opportunities for Light Science and Concurrent Technologies

-0.3

Correlation Coefficient

Light Science  Concurrent Technologies

Very good diversification

The 3 months correlation between Light and Concurrent is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Light Science Technologies and Concurrent Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concurrent Technologies and Light Science 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 Light Science Technologies are associated (or correlated) with Concurrent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concurrent Technologies has no effect on the direction of Light Science i.e., Light Science and Concurrent Technologies go up and down completely randomly.

Pair Corralation between Light Science and Concurrent Technologies

Assuming the 90 days trading horizon Light Science Technologies is expected to under-perform the Concurrent Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Light Science Technologies is 1.13 times less risky than Concurrent Technologies. The stock trades about -0.26 of its potential returns per unit of risk. The Concurrent Technologies Plc is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  13,250  in Concurrent Technologies Plc on October 23, 2024 and sell it today you would earn a total of  3,600  from holding Concurrent Technologies Plc or generate 27.17% return on investment over 90 days.

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

Light Science Technologies  vs.  Concurrent Technologies Plc

Light Science Techno

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Light Science Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Light Science is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Concurrent Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Concurrent Technologies Plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Concurrent Technologies exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Light Science and Concurrent Technologies

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

The idea behind Light Science Technologies and Concurrent Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.