Correlation Between Lasertec and SCREEN Holdings

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

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

Diversification Opportunities for Lasertec and SCREEN Holdings

0.75

Correlation Coefficient

Lasertec  SCREEN Holdings

Poor diversification

The 3 months correlation between Lasertec and SCREEN is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lasertec and SCREEN Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCREEN Holdings and Lasertec 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 Lasertec are associated (or correlated) with SCREEN Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCREEN Holdings has no effect on the direction of Lasertec i.e., Lasertec and SCREEN Holdings go up and down completely randomly.

Pair Corralation between Lasertec and SCREEN Holdings

Assuming the 90 days horizon Lasertec is expected to generate 0.71 times more return on investment than SCREEN Holdings. However, Lasertec is 1.4 times less risky than SCREEN Holdings. It trades about -0.26 of its potential returns per unit of risk. SCREEN Holdings Co is currently generating about -0.26 per unit of risk. If you would invest  17,685  in Lasertec on August 31, 2024 and sell it today you would lose (6,770) from holding Lasertec or give up 38.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	22.22%
Values	Daily Returns

Lasertec  vs.  SCREEN Holdings Co

Lasertec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lasertec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SCREEN Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCREEN Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Lasertec and SCREEN Holdings

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

The idea behind Lasertec and SCREEN Holdings Co 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.