Correlation Between InTest and Lam Research

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

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

Diversification Opportunities for InTest and Lam Research

-0.12

Correlation Coefficient

InTest  Lam Research

Good diversification

The 3 months correlation between InTest and Lam is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding inTest and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp and InTest 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 inTest are associated (or correlated) with Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of InTest i.e., InTest and Lam Research go up and down completely randomly.

Pair Corralation between InTest and Lam Research

Given the investment horizon of 90 days inTest is expected to generate 1.26 times more return on investment than Lam Research. However, InTest is 1.26 times more volatile than Lam Research Corp. It trades about 0.09 of its potential returns per unit of risk. Lam Research Corp is currently generating about -0.02 per unit of risk. If you would invest  678.00  in inTest on August 31, 2024 and sell it today you would earn a total of  116.00  from holding inTest or generate 17.11% return on investment over 90 days.

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

inTest  vs.  Lam Research Corp

inTest

Risk-Adjusted Performance

7 of 100

Modest

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

Lam Research Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with InTest and Lam Research

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

The idea behind inTest and Lam Research Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..