Correlation Between Tokyo Electron and Lasertec

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

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

Diversification Opportunities for Tokyo Electron and Lasertec

0.56

Correlation Coefficient

Tokyo Electron  Lasertec

Very weak diversification

The 3 months correlation between Tokyo and Lasertec is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tokyo Electron and Lasertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lasertec and Tokyo Electron 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 Tokyo Electron are associated (or correlated) with Lasertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lasertec has no effect on the direction of Tokyo Electron i.e., Tokyo Electron and Lasertec go up and down completely randomly.

Pair Corralation between Tokyo Electron and Lasertec

Assuming the 90 days horizon Tokyo Electron is expected to generate 1.71 times less return on investment than Lasertec. In addition to that, Tokyo Electron is 1.22 times more volatile than Lasertec. It trades about 0.05 of its total potential returns per unit of risk. Lasertec is currently generating about 0.11 per unit of volatility. If you would invest  8,745  in Lasertec on May 4, 2025 and sell it today you would earn a total of  2,255  from holding Lasertec or generate 25.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Tokyo Electron  vs.  Lasertec

Tokyo Electron

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyo Electron are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Tokyo Electron reported solid returns over the last few months and may actually be approaching a breakup point.

Lasertec

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lasertec are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Lasertec reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tokyo Electron and Lasertec

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

The idea behind Tokyo Electron and Lasertec 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.