Correlation Between Lantronix and Comtech Telecommunicatio

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

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

Diversification Opportunities for Lantronix and Comtech Telecommunicatio

0.73

Correlation Coefficient

Lantronix  Comtech Telecommunicatio

Poor diversification

The 3 months correlation between Lantronix and Comtech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio and Lantronix 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 Lantronix are associated (or correlated) with Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of Lantronix i.e., Lantronix and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between Lantronix and Comtech Telecommunicatio

Given the investment horizon of 90 days Lantronix is expected to generate 0.54 times more return on investment than Comtech Telecommunicatio. However, Lantronix is 1.86 times less risky than Comtech Telecommunicatio. It trades about -0.14 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about -0.12 per unit of risk. If you would invest  408.00  in Lantronix on December 30, 2024 and sell it today you would lose (156.00) from holding Lantronix or give up 38.24% of portfolio value over 90 days.

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

Lantronix  vs.  Comtech Telecommunications Cor

Lantronix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Comtech Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lantronix and Comtech Telecommunicatio

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

The idea behind Lantronix and Comtech Telecommunications Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.