Correlation Between Lightbridge Corp and Ideal Power

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

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

Diversification Opportunities for Lightbridge Corp and Ideal Power

-0.38

Correlation Coefficient

Lightbridge Corp  Ideal Power

Very good diversification

The 3 months correlation between Lightbridge and Ideal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lightbridge Corp and Ideal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideal Power and Lightbridge Corp 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 Lightbridge Corp are associated (or correlated) with Ideal Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideal Power has no effect on the direction of Lightbridge Corp i.e., Lightbridge Corp and Ideal Power go up and down completely randomly.

Pair Corralation between Lightbridge Corp and Ideal Power

Given the investment horizon of 90 days Lightbridge Corp is expected to generate 3.45 times more return on investment than Ideal Power. However, Lightbridge Corp is 3.45 times more volatile than Ideal Power. It trades about 0.1 of its potential returns per unit of risk. Ideal Power is currently generating about -0.15 per unit of risk. If you would invest  500.00  in Lightbridge Corp on December 30, 2024 and sell it today you would earn a total of  219.00  from holding Lightbridge Corp or generate 43.8% return on investment over 90 days.

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

Lightbridge Corp  vs.  Ideal Power

Lightbridge Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lightbridge Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental drivers, Lightbridge Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Ideal Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ideal Power has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lightbridge Corp and Ideal Power

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

The idea behind Lightbridge Corp and Ideal Power 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.