Correlation Between Lantronix and Radware

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

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

Diversification Opportunities for Lantronix and Radware

-0.33

Correlation Coefficient

Lantronix  Radware

Very good diversification

The 3 months correlation between Lantronix and Radware is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware 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 Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Lantronix i.e., Lantronix and Radware go up and down completely randomly.

Pair Corralation between Lantronix and Radware

Given the investment horizon of 90 days Lantronix is expected to generate 2.47 times more return on investment than Radware. However, Lantronix is 2.47 times more volatile than Radware. It trades about 0.34 of its potential returns per unit of risk. Radware is currently generating about -0.14 per unit of risk. If you would invest  340.00  in Lantronix on October 8, 2024 and sell it today you would earn a total of  83.00  from holding Lantronix or generate 24.41% return on investment over 90 days.

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

Lantronix  vs.  Radware

Lantronix

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lantronix are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Lantronix showed solid returns over the last few months and may actually be approaching a breakup point.

Radware

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Radware is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Lantronix and Radware

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

The idea behind Lantronix and Radware 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.