Correlation Between LightPath Technologies and Neonode

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

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

Diversification Opportunities for LightPath Technologies and Neonode

0.68

Correlation Coefficient

LightPath Technologies  Neonode

Poor diversification

The 3 months correlation between LightPath and Neonode is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding LightPath Technologies and Neonode in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neonode and LightPath Technologies 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 LightPath Technologies are associated (or correlated) with Neonode. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neonode has no effect on the direction of LightPath Technologies i.e., LightPath Technologies and Neonode go up and down completely randomly.

Pair Corralation between LightPath Technologies and Neonode

Given the investment horizon of 90 days LightPath Technologies is expected to generate 2.25 times less return on investment than Neonode. But when comparing it to its historical volatility, LightPath Technologies is 2.19 times less risky than Neonode. It trades about 0.16 of its potential returns per unit of risk. Neonode is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,031  in Neonode on May 18, 2025 and sell it today you would earn a total of  1,243  from holding Neonode or generate 120.56% return on investment over 90 days.

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

LightPath Technologies  vs.  Neonode

LightPath Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LightPath Technologies are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, LightPath Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Neonode

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neonode are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Neonode displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LightPath Technologies and Neonode

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

The idea behind LightPath Technologies and Neonode 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.