Correlation Between Taitron Components and LightPath Technologies

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

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

Diversification Opportunities for Taitron Components and LightPath Technologies

0.61

Correlation Coefficient

Taitron Components  LightPath Technologies

Poor diversification

The 3 months correlation between Taitron and LightPath is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Taitron Components Incorporate and LightPath Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LightPath Technologies and Taitron Components 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 Taitron Components Incorporated are associated (or correlated) with LightPath Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LightPath Technologies has no effect on the direction of Taitron Components i.e., Taitron Components and LightPath Technologies go up and down completely randomly.

Pair Corralation between Taitron Components and LightPath Technologies

Given the investment horizon of 90 days Taitron Components is expected to generate 3.56 times less return on investment than LightPath Technologies. In addition to that, Taitron Components is 1.06 times more volatile than LightPath Technologies. It trades about 0.05 of its total potential returns per unit of risk. LightPath Technologies is currently generating about 0.19 per unit of volatility. If you would invest  332.00  in LightPath Technologies on July 21, 2025 and sell it today you would earn a total of  412.00  from holding LightPath Technologies or generate 124.1% return on investment over 90 days.

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

Taitron Components Incorporate  vs.  LightPath Technologies

Taitron Components

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Taitron Components Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Taitron Components unveiled solid returns over the last few months and may actually be approaching a breakup point.

LightPath Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, LightPath Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taitron Components and LightPath Technologies

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

The idea behind Taitron Components Incorporated and LightPath Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .