Correlation Between Lemtech Holdings and Fun Yours

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

By analyzing existing cross correlation between Lemtech Holdings Co and Fun Yours Technology, you can compare the effects of market volatilities on Lemtech Holdings and Fun Yours 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 Lemtech Holdings with a short position of Fun Yours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemtech Holdings and Fun Yours.

Diversification Opportunities for Lemtech Holdings and Fun Yours

0.2

Correlation Coefficient

Lemtech Holdings  Fun Yours

Modest diversification

The 3 months correlation between Lemtech and Fun is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lemtech Holdings Co and Fun Yours Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fun Yours Technology and Lemtech Holdings 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 Lemtech Holdings Co are associated (or correlated) with Fun Yours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fun Yours Technology has no effect on the direction of Lemtech Holdings i.e., Lemtech Holdings and Fun Yours go up and down completely randomly.

Pair Corralation between Lemtech Holdings and Fun Yours

Assuming the 90 days trading horizon Lemtech Holdings Co is expected to generate 1.66 times more return on investment than Fun Yours. However, Lemtech Holdings is 1.66 times more volatile than Fun Yours Technology. It trades about 0.19 of its potential returns per unit of risk. Fun Yours Technology is currently generating about -0.03 per unit of risk. If you would invest  10,100  in Lemtech Holdings Co on September 12, 2024 and sell it today you would earn a total of  3,100  from holding Lemtech Holdings Co or generate 30.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Lemtech Holdings Co  vs.  Fun Yours Technology

Lemtech Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lemtech Holdings Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lemtech Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Fun Yours Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fun Yours Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Fun Yours is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Lemtech Holdings and Fun Yours

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

The idea behind Lemtech Holdings Co and Fun Yours Technology 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.