Correlation Between ClearSign Combustion and Lantronix

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

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

Diversification Opportunities for ClearSign Combustion and Lantronix

-0.58

Correlation Coefficient

ClearSign Combustion  Lantronix

Excellent diversification

The 3 months correlation between ClearSign and Lantronix is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ClearSign Combustion and Lantronix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantronix and ClearSign Combustion 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 ClearSign Combustion are associated (or correlated) with Lantronix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantronix has no effect on the direction of ClearSign Combustion i.e., ClearSign Combustion and Lantronix go up and down completely randomly.

Pair Corralation between ClearSign Combustion and Lantronix

Given the investment horizon of 90 days ClearSign Combustion is expected to generate 1.0 times more return on investment than Lantronix. However, ClearSign Combustion is 1.0 times less risky than Lantronix. It trades about 0.18 of its potential returns per unit of risk. Lantronix is currently generating about -0.02 per unit of risk. If you would invest  71.00  in ClearSign Combustion on September 2, 2024 and sell it today you would earn a total of  47.00  from holding ClearSign Combustion or generate 66.2% return on investment over 90 days.

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

ClearSign Combustion  vs.  Lantronix

ClearSign Combustion

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ClearSign Combustion are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, ClearSign Combustion reported solid returns over the last few months and may actually be approaching a breakup point.

Lantronix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lantronix is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ClearSign Combustion and Lantronix

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

The idea behind ClearSign Combustion and Lantronix 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.