Correlation Between Chart Industries and Laser Photonics

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

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

Diversification Opportunities for Chart Industries and Laser Photonics

-0.43

Correlation Coefficient

Chart Industries  Laser Photonics

Very good diversification

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

Pair Corralation between Chart Industries and Laser Photonics

Given the investment horizon of 90 days Chart Industries is expected to generate 1.57 times less return on investment than Laser Photonics. But when comparing it to its historical volatility, Chart Industries is 6.87 times less risky than Laser Photonics. It trades about 0.34 of its potential returns per unit of risk. Laser Photonics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  547.00  in Laser Photonics on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Laser Photonics or generate 4.39% return on investment over 90 days.

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

Chart Industries  vs.  Laser Photonics

Chart Industries

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Laser Photonics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laser Photonics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Laser Photonics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chart Industries and Laser Photonics

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

The idea behind Chart Industries and Laser Photonics 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.