Correlation Between Lantronix and Harmonic

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

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

Diversification Opportunities for Lantronix and Harmonic

0.46

Correlation Coefficient

Lantronix  Harmonic

Very weak diversification

The 3 months correlation between Lantronix and Harmonic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Harmonic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmonic 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 Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmonic has no effect on the direction of Lantronix i.e., Lantronix and Harmonic go up and down completely randomly.

Pair Corralation between Lantronix and Harmonic

Given the investment horizon of 90 days Lantronix is expected to generate 1.33 times more return on investment than Harmonic. However, Lantronix is 1.33 times more volatile than Harmonic. It trades about -0.03 of its potential returns per unit of risk. Harmonic is currently generating about -0.05 per unit of risk. If you would invest  414.00  in Lantronix on October 22, 2024 and sell it today you would lose (63.00) from holding Lantronix or give up 15.22% of portfolio value over 90 days.

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

Lantronix  vs.  Harmonic

Lantronix

Risk-Adjusted Performance

0 of 100

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 latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Harmonic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Lantronix and Harmonic

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

The idea behind Lantronix and Harmonic 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.