Correlation Between Zedge and LENSAR

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

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

Diversification Opportunities for Zedge and LENSAR

-0.85

Correlation Coefficient

Zedge  LENSAR

Pay attention - limited upside

The 3 months correlation between Zedge and LENSAR is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Zedge Inc and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Zedge 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 Zedge Inc are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Zedge i.e., Zedge and LENSAR go up and down completely randomly.

Pair Corralation between Zedge and LENSAR

Given the investment horizon of 90 days Zedge Inc is expected to under-perform the LENSAR. In addition to that, Zedge is 2.07 times more volatile than LENSAR Inc. It trades about -0.03 of its total potential returns per unit of risk. LENSAR Inc is currently generating about 0.02 per unit of volatility. If you would invest  745.00  in LENSAR Inc on September 22, 2024 and sell it today you would earn a total of  5.00  from holding LENSAR Inc or generate 0.67% return on investment over 90 days.

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

Zedge Inc  vs.  LENSAR Inc

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

LENSAR Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Zedge and LENSAR

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

The idea behind Zedge Inc and LENSAR Inc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.