Correlation Between Visual Photonics and LandMark Optoelectronics

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

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

Diversification Opportunities for Visual Photonics and LandMark Optoelectronics

0.43

Correlation Coefficient

Visual Photonics  LandMark Optoelectronics

Very weak diversification

The 3 months correlation between Visual and LandMark is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Visual Photonics Epitaxy and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics and Visual Photonics 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 Visual Photonics Epitaxy are associated (or correlated) with LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of Visual Photonics i.e., Visual Photonics and LandMark Optoelectronics go up and down completely randomly.

Pair Corralation between Visual Photonics and LandMark Optoelectronics

Assuming the 90 days trading horizon Visual Photonics is expected to generate 2.97 times less return on investment than LandMark Optoelectronics. But when comparing it to its historical volatility, Visual Photonics Epitaxy is 1.4 times less risky than LandMark Optoelectronics. It trades about 0.1 of its potential returns per unit of risk. LandMark Optoelectronics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  20,900  in LandMark Optoelectronics on September 13, 2024 and sell it today you would earn a total of  14,500  from holding LandMark Optoelectronics or generate 69.38% return on investment over 90 days.

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

Visual Photonics Epitaxy  vs.  LandMark Optoelectronics

Visual Photonics Epitaxy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Visual Photonics Epitaxy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Visual Photonics showed solid returns over the last few months and may actually be approaching a breakup point.

LandMark Optoelectronics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LandMark Optoelectronics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LandMark Optoelectronics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Visual Photonics and LandMark Optoelectronics

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

The idea behind Visual Photonics Epitaxy and LandMark Optoelectronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.