Correlation Between SoFi Technologies and Lasertec

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

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

Diversification Opportunities for SoFi Technologies and Lasertec

-0.91

Correlation Coefficient

SoFi Technologies  Lasertec

Pay attention - limited upside

The 3 months correlation between SoFi and Lasertec is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding SoFi Technologies and Lasertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lasertec and SoFi Technologies 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 SoFi Technologies are associated (or correlated) with Lasertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lasertec has no effect on the direction of SoFi Technologies i.e., SoFi Technologies and Lasertec go up and down completely randomly.

Pair Corralation between SoFi Technologies and Lasertec

Given the investment horizon of 90 days SoFi Technologies is expected to generate 0.79 times more return on investment than Lasertec. However, SoFi Technologies is 1.27 times less risky than Lasertec. It trades about 0.22 of its potential returns per unit of risk. Lasertec is currently generating about -0.12 per unit of risk. If you would invest  638.00  in SoFi Technologies on October 7, 2024 and sell it today you would earn a total of  846.00  from holding SoFi Technologies or generate 132.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

SoFi Technologies  vs.  Lasertec

SoFi Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SoFi Technologies are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, SoFi Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Lasertec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lasertec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SoFi Technologies and Lasertec

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

The idea behind SoFi Technologies and Lasertec 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.