Correlation Between SmartSet Automation and NLIGHT

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

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

Diversification Opportunities for SmartSet Automation and NLIGHT

0.15

Correlation Coefficient

SmartSet Automation  NLIGHT

Average diversification

The 3 months correlation between SmartSet and NLIGHT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SmartSet Automation LLC and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc and SmartSet Automation 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 SmartSet Automation LLC are associated (or correlated) with NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of SmartSet Automation i.e., SmartSet Automation and NLIGHT go up and down completely randomly.

Pair Corralation between SmartSet Automation and NLIGHT

Given the investment horizon of 90 days SmartSet Automation LLC is expected to generate 3.39 times more return on investment than NLIGHT. However, SmartSet Automation is 3.39 times more volatile than nLIGHT Inc. It trades about 0.11 of its potential returns per unit of risk. nLIGHT Inc is currently generating about 0.24 per unit of risk. If you would invest  0.13  in SmartSet Automation LLC on May 20, 2025 and sell it today you would earn a total of  0.06  from holding SmartSet Automation LLC or generate 46.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

SmartSet Automation LLC  vs.  nLIGHT Inc

SmartSet Automation LLC

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SmartSet Automation LLC are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, SmartSet Automation exhibited solid returns over the last few months and may actually be approaching a breakup point.

nLIGHT Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in nLIGHT Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NLIGHT reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SmartSet Automation and NLIGHT

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

The idea behind SmartSet Automation LLC and nLIGHT 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.