Correlation Between LightPath Technologies and Maris Tech

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

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

Diversification Opportunities for LightPath Technologies and Maris Tech

0.36

Correlation Coefficient

LightPath Technologies  Maris Tech

Weak diversification

The 3 months correlation between LightPath and Maris is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Maris Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maris Tech and LightPath 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 LightPath Technologies are associated (or correlated) with Maris Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maris Tech has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Maris Tech go up and down completely randomly.

Pair Corralation between LightPath Technologies and Maris Tech

Given the investment horizon of 90 days LightPath Technologies is expected to under-perform the Maris Tech. But the stock apears to be less risky and, when comparing its historical volatility, LightPath Technologies is 1.03 times less risky than Maris Tech. The stock trades about -0.07 of its potential returns per unit of risk. The Maris Tech is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Maris Tech on March 4, 2024 and sell it today you would lose (5.00) from holding Maris Tech or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

LightPath Technologies  vs.  Maris Tech

LightPath Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LightPath Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Maris Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maris Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Maris Tech is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with LightPath Technologies and Maris Tech

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

The idea behind LightPath Technologies and Maris Tech 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.