Correlation Between Zegona Communications and Light Science

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Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Light Science 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 Zegona Communications and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zegona Communications Plc and Light Science Technologies, you can compare the effects of market volatilities on Zegona Communications and Light Science 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 Zegona Communications with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Light Science.

Diversification Opportunities for Zegona Communications and Light Science

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Zegona and Light is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and Zegona Communications 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 Zegona Communications Plc are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Zegona Communications i.e., Zegona Communications and Light Science go up and down completely randomly.

Pair Corralation between Zegona Communications and Light Science

Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 0.66 times more return on investment than Light Science. However, Zegona Communications Plc is 1.5 times less risky than Light Science. It trades about 0.01 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.25 per unit of risk. If you would invest  40,600  in Zegona Communications Plc on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Zegona Communications Plc or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Zegona Communications Plc  vs.  Light Science Technologies

 Performance 
       Timeline  
Zegona Communications Plc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Zegona Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.
Light Science Techno 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Light Science Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Zegona Communications and Light Science Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Zegona Communications and Light Science

The main advantage of trading using opposite Zegona Communications and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.
The idea behind Zegona Communications Plc and Light Science Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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