Correlation Between LightPath Technologies and LSI Industries

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

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

Diversification Opportunities for LightPath Technologies and LSI Industries

0.54

Correlation Coefficient

LightPath Technologies  LSI Industries

Very weak diversification

The 3 months correlation between LightPath and LSI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries and LightPath Technologies 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 LightPath Technologies are associated (or correlated) with LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and LSI Industries go up and down completely randomly.

Pair Corralation between LightPath Technologies and LSI Industries

Given the investment horizon of 90 days LightPath Technologies is expected to generate 4.23 times less return on investment than LSI Industries. In addition to that, LightPath Technologies is 1.39 times more volatile than LSI Industries. It trades about 0.08 of its total potential returns per unit of risk. LSI Industries is currently generating about 0.44 per unit of volatility. If you would invest  1,632  in LSI Industries on September 1, 2024 and sell it today you would earn a total of  412.00  from holding LSI Industries or generate 25.25% return on investment over 90 days.

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

LightPath Technologies  vs.  LSI Industries

LightPath Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, LightPath Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

LSI Industries

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LSI Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LightPath Technologies and LSI Industries

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

The idea behind LightPath Technologies and LSI Industries 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.