Correlation Between NLIGHT and Flex

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

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

Diversification Opportunities for NLIGHT and Flex

0.9

Correlation Coefficient

NLIGHT  Flex

Almost no diversification

The 3 months correlation between NLIGHT and Flex is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding nLIGHT Inc and Flex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flex and NLIGHT 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 nLIGHT Inc are associated (or correlated) with Flex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flex has no effect on the direction of NLIGHT i.e., NLIGHT and Flex go up and down completely randomly.

Pair Corralation between NLIGHT and Flex

Given the investment horizon of 90 days nLIGHT Inc is expected to generate 2.79 times more return on investment than Flex. However, NLIGHT is 2.79 times more volatile than Flex. It trades about 0.28 of its potential returns per unit of risk. Flex is currently generating about 0.26 per unit of risk. If you would invest  835.00  in nLIGHT Inc on May 4, 2025 and sell it today you would earn a total of  1,176  from holding nLIGHT Inc or generate 140.84% return on investment over 90 days.

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

nLIGHT Inc  vs.  Flex

nLIGHT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in nLIGHT Inc are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, NLIGHT reported solid returns over the last few months and may actually be approaching a breakup point.

Flex

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Flex are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Flex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NLIGHT and Flex

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

The idea behind nLIGHT Inc and Flex 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.