Correlation Between Lantronix and Foxx Development

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

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

Diversification Opportunities for Lantronix and Foxx Development

0.67

Correlation Coefficient

Lantronix  Foxx Development

Poor diversification

The 3 months correlation between Lantronix and Foxx is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lantronix and Foxx Development Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxx Development Holdings and Lantronix 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 Lantronix are associated (or correlated) with Foxx Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxx Development Holdings has no effect on the direction of Lantronix i.e., Lantronix and Foxx Development go up and down completely randomly.

Pair Corralation between Lantronix and Foxx Development

Given the investment horizon of 90 days Lantronix is expected to generate 0.41 times more return on investment than Foxx Development. However, Lantronix is 2.41 times less risky than Foxx Development. It trades about -0.02 of its potential returns per unit of risk. Foxx Development Holdings is currently generating about -0.04 per unit of risk. If you would invest  391.00  in Lantronix on September 17, 2024 and sell it today you would lose (51.50) from holding Lantronix or give up 13.17% of portfolio value over 90 days.

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

Lantronix  vs.  Foxx Development Holdings

Lantronix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Foxx Development Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foxx Development Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lantronix and Foxx Development

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

The idea behind Lantronix and Foxx Development Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.