Correlation Between Metalert and Lantronix

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

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

Diversification Opportunities for Metalert and Lantronix

-0.26

Correlation Coefficient

Metalert  Lantronix

Very good diversification

The 3 months correlation between Metalert and Lantronix is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Metalert and Lantronix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantronix and Metalert 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 Metalert are associated (or correlated) with Lantronix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantronix has no effect on the direction of Metalert i.e., Metalert and Lantronix go up and down completely randomly.

Pair Corralation between Metalert and Lantronix

Given the investment horizon of 90 days Metalert is expected to generate 2.62 times more return on investment than Lantronix. However, Metalert is 2.62 times more volatile than Lantronix. It trades about 0.14 of its potential returns per unit of risk. Lantronix is currently generating about -0.02 per unit of risk. If you would invest  2.60  in Metalert on September 3, 2024 and sell it today you would earn a total of  2.40  from holding Metalert or generate 92.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Metalert  vs.  Lantronix

Metalert

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalert are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Metalert unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong basic indicators, Lantronix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Metalert and Lantronix

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

The idea behind Metalert and Lantronix 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 Transaction History module to view history of all your transactions and understand their impact on performance.