Correlation Between DZS and Lam Research

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

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

Diversification Opportunities for DZS and Lam Research

-0.11

Correlation Coefficient

DZS  Lam Research

Good diversification

The 3 months correlation between DZS and Lam is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DZS Inc and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp and DZS 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 DZS Inc are associated (or correlated) with Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of DZS i.e., DZS and Lam Research go up and down completely randomly.

Pair Corralation between DZS and Lam Research

Given the investment horizon of 90 days DZS Inc is expected to under-perform the Lam Research. In addition to that, DZS is 2.06 times more volatile than Lam Research Corp. It trades about -0.19 of its total potential returns per unit of risk. Lam Research Corp is currently generating about -0.08 per unit of volatility. If you would invest  96,726  in Lam Research Corp on February 6, 2024 and sell it today you would lose (4,256) from holding Lam Research Corp or give up 4.4% of portfolio value over 90 days.

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

DZS Inc  vs.  Lam Research Corp

DZS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DZS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Lam Research Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lam Research Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental indicators, Lam Research may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with DZS and Lam Research

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

The idea behind DZS Inc and Lam Research Corp 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.