Correlation Between Lasertec and AXT

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

By analyzing existing cross correlation between Lasertec and AXT Inc, you can compare the effects of market volatilities on Lasertec and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lasertec and AXT.

Diversification Opportunities for Lasertec and AXT

0.0

Correlation Coefficient

Lasertec  AXT

Pay attention - limited upside

The 3 months correlation between Lasertec and AXT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lasertec and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Lasertec i.e., Lasertec and AXT go up and down completely randomly.

Pair Corralation between Lasertec and AXT

If you would invest  0.00  in AXT Inc on March 6, 2024 and sell it today you would earn a total of  0.00  from holding AXT Inc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lasertec  vs.  AXT Inc

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 nearly stable fundamental indicators, Lasertec is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AXT is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Lasertec and AXT

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

The idea behind Lasertec and AXT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.