Correlation Between LENSAR and United States

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

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

Diversification Opportunities for LENSAR and United States

0.37

Correlation Coefficient

LENSAR  United States

Weak diversification

The 3 months correlation between LENSAR and United is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and LENSAR 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 LENSAR Inc are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of LENSAR i.e., LENSAR and United States go up and down completely randomly.

Pair Corralation between LENSAR and United States

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.55 times more return on investment than United States. However, LENSAR is 1.55 times more volatile than United States Steel. It trades about 0.23 of its potential returns per unit of risk. United States Steel is currently generating about -0.03 per unit of risk. If you would invest  420.00  in LENSAR Inc on September 17, 2024 and sell it today you would earn a total of  335.00  from holding LENSAR Inc or generate 79.76% return on investment over 90 days.

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

LENSAR Inc  vs.  United States Steel

LENSAR Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with LENSAR and United States

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

The idea behind LENSAR Inc and United States Steel 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.