Correlation Between ReTo Eco and LENSAR

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

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

Diversification Opportunities for ReTo Eco and LENSAR

-0.86

Correlation Coefficient

ReTo Eco  LENSAR

Pay attention - limited upside

The 3 months correlation between ReTo and LENSAR is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and ReTo Eco 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 ReTo Eco Solutions are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of ReTo Eco i.e., ReTo Eco and LENSAR go up and down completely randomly.

Pair Corralation between ReTo Eco and LENSAR

Given the investment horizon of 90 days ReTo Eco Solutions is expected to generate 0.78 times more return on investment than LENSAR. However, ReTo Eco Solutions is 1.29 times less risky than LENSAR. It trades about 0.01 of its potential returns per unit of risk. LENSAR Inc is currently generating about -0.05 per unit of risk. If you would invest  91.00  in ReTo Eco Solutions on October 22, 2024 and sell it today you would earn a total of  0.00  from holding ReTo Eco Solutions or generate 0.0% return on investment over 90 days.

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

ReTo Eco Solutions  vs.  LENSAR Inc

ReTo Eco Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

LENSAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ReTo Eco and LENSAR

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

The idea behind ReTo Eco Solutions and LENSAR Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..