Correlation Between Satellogic Warrant and NLIGHT

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

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

Diversification Opportunities for Satellogic Warrant and NLIGHT

-0.14

Correlation Coefficient

Satellogic Warrant  NLIGHT

Good diversification

The 3 months correlation between Satellogic and NLIGHT is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Satellogic Warrant and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc and Satellogic Warrant 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 Satellogic Warrant are associated (or correlated) with NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Satellogic Warrant i.e., Satellogic Warrant and NLIGHT go up and down completely randomly.

Pair Corralation between Satellogic Warrant and NLIGHT

Assuming the 90 days horizon Satellogic Warrant is expected to generate 7.08 times more return on investment than NLIGHT. However, Satellogic Warrant is 7.08 times more volatile than nLIGHT Inc. It trades about 0.3 of its potential returns per unit of risk. nLIGHT Inc is currently generating about 0.02 per unit of risk. If you would invest  3.41  in Satellogic Warrant on September 23, 2024 and sell it today you would earn a total of  34.59  from holding Satellogic Warrant or generate 1014.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.08%
Values	Daily Returns

Satellogic Warrant  vs.  nLIGHT Inc

Satellogic Warrant

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Satellogic Warrant are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent essential indicators, Satellogic Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

nLIGHT Inc

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Satellogic Warrant and NLIGHT

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

The idea behind Satellogic Warrant and nLIGHT 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.