Applied Optoelectronics vs Lumentum Holdings (AAOI vs LITE) 2026: Stock Returns, Risk & Volatility

Q: Which is a better investment: AAOI or LITE?

Over the past year, LITE looks like the better investment: it had higher total return (LITE +1311.5% vs AAOI +996.6%) and a higher Sharpe ratio (LITE 3.70 vs AAOI 2.42). On risk, LITE was less volatile (LITE 80.1% vs AAOI 132.6%), LITE had a smaller max drawdown (LITE -28.7% vs AAOI -47.6%), and LITE had less severe losses on the worst 5% of days (Expected Shortfall of LITE -10.68% vs AAOI -14.38%).

Written by Gale Finance Team

Reviewed by Sid Kalla CFA Charterholder

Quick answer

Which is a better investment: AAOI or LITE?

Over the past year, LITE outperformed AAOI. LITE returned +1311.5% compared with AAOI’s +996.6%. LITE had the better risk-adjusted return, with a Sharpe ratio of 3.70 versus AAOI’s 2.42. LITE was less volatile than AAOI, and LITE had a smaller max drawdown than AAOI.

Total Return

AAOI +996.6%

LITE +1311.5%

Sharpe Ratio

AAOI 2.42

LITE 3.70

Annualized Volatility

AAOI 132.6%

LITE 80.1%

Max Drawdown

AAOI -47.6%

LITE -28.7%

Metric winners: Total Return: LITE; Sharpe Ratio: LITE; Annualized Volatility: LITE (less volatile); Max Drawdown: LITE (smaller drawdown).

AAOI Total Return

↑ +996.6%

LITE Total Return

↑ +1311.5%

Relative Performance of AAOI vs LITE (Normalized to 100)

AAOI LITE

Normalized to 100 at start date for comparison

Trade AAOI or LITE

Access these assets on trusted platforms.

Hyperliquid

Trade perpetual futures exposure where supportedAAOILITETrade on Hyperliquid

Binance

Trade futures exposure on a global exchange where supportedAAOILITETrade on Binance

Affiliate disclosure

Key Takeaways

Total Return: AAOI delivered a +996.6% total return, while LITE returned +1311.5% over the same period. LITE outperformed on total returns.
Risk-Adjusted Return (Sharpe Ratio): LITE had a higher Sharpe (3.70 vs 2.42), indicating better risk-adjusted performance.
Volatility (Annualized): AAOI was more volatile, with 132.6% annualized volatility, versus 80.1% for LITE.
Maximum Drawdown: LITE's maximum drawdown was -28.7%, while AAOI experienced a deeper drawdown of -47.6%.
Tail Risk (VaR & Expected Shortfall): At the 5% level (daily log returns), AAOI's VaR was -11.68% and its Expected Shortfall (CVaR) was -14.38%; LITE's were -7.07% and -10.68%. VaR is the cutoff; Expected Shortfall is the average move on the worst days.
Skew & Kurtosis: Skew: AAOI 0.85 vs LITE -0.09. Excess kurtosis: AAOI 3.46 vs LITE 1.69. Negative skew leans downside; higher excess kurtosis means fatter tails.
Tail Days & Extremes: 2σ tail days (down/up): AAOI 4/9, LITE 8/4. Worst day: AAOI -16.39% (2026-03-12) vs LITE -14.19% (2026-03-06). Best day: AAOI +56.88% (2026-02-27) vs LITE +23.57% (2025-11-05).
Risk ratios: Sortino - AAOI: 4.64 vs. LITE: 6.41 , Calmar - AAOI: 21.27 vs. LITE: 46.51 , Sterling - AAOI: 47.05 vs. LITE: 81.05 , Treynor - AAOI: 0.78 vs. LITE: 1.14 , Ulcer Index - AAOI: 16.87% vs. LITE: 6.55%

Investment Comparison

If you invested $10,000 in each asset on April 25, 2025:

AAOI $109,657.64 +996.6%

LITE $141,148.33 +1311.5%

Difference: $31,490.69 (LITE ahead)

Applied Optoelectronics vs Lumentum Holdings Performance Over Time

Metric	AAOI	LITE
30 Days	20.9%	5.6%
90 Days	285.6%	149.7%
180 Days	305%	372.3%
1 Year	996.6%	1311.5%

Shorter time frames can show different leaders as market conditions change. Consider your investment horizon when comparing performance.

Applied Optoelectronics vs Lumentum Holdings Correlation

Average Correlation

moderately correlated

0.51

Current (30-day) 0.77

30-day rolling range +0.24 to +0.78

Applied Optoelectronics and Lumentum Holdings are moderately correlated over the past year. With a correlation of 0.51, these assets show moderate co-movement, offering some diversification when held together.

For portfolio construction, this moderate correlation offers some diversification benefit, though the assets still tend to move together during major market moves.

Metric	Value
Current (30-day)	0.77
Average (full period)	0.51
Minimum (30-day rolling)	0.24
Maximum (30-day rolling)	0.78

Correlation measures how closely two assets move together. Values near +1 indicate strong co-movement, near 0 indicates independence, and negative values indicate inverse movement. Current, minimum, and maximum figures are 30-day rolling correlations on shared daily returns.

Drawdown

Maximum Drawdown

AAOI

-47.6%

LITE

-28.7%

Applied Optoelectronics experienced its maximum drawdown of -47.6% from 2025-10-27 to 2025-11-20. It took 32 days to recover.

Lumentum Holdings experienced its maximum drawdown of -28.7% from 2026-03-02 to 2026-03-06. It took 18 days to recover.

Smaller drawdowns and faster recoveries indicate lower downside risk and greater resilience during market stress.

Applied Optoelectronics vs Lumentum Holdings Volatility (AAOI vs LITE)

AAOI Volatility

132.6%

±8.35% 1-day vol

LITE Volatility

80.1%

±5.05% 1-day vol

1-day volatility (1σ)

AAOI

±8.35%

LITE

±5.05%

Applied Optoelectronics's 132.6% annualized volatility translates to about ±8.35% one-standard-deviation daily volatility.

Lumentum Holdings's 80.1% annualized volatility translates to about ±5.05% one-standard-deviation daily volatility.

AAOI had the wider volatility profile over this window. That means its day-to-day return distribution was broader; LITE was calmer, but lower volatility does not by itself mean better returns.

Treat the ± daily figure as a one-standard-deviation estimate from historical returns, not a forecast or expected absolute daily move. For context, 15-18% annualized volatility is roughly ±1% one-standard-deviation daily volatility.

Risk-adjusted ratios

Sharpe Ratio of AAOI and LITE

Sharpe Ratio: AAOI vs. LITE

Return per total volatility

Sharpe gives us excess return per unit of risk. Upside and downside volatility both count as risk.

Higher is better

excess return / total volatility

Formula

\displaystyle \mathrm{Sharpe} = \frac{\mathbb{E}[R] - R_f}{\sigma_R}

Sharpe ratio measures return per unit of risk (volatility). A higher Sharpe indicates better risk-adjusted performance. LITE had a higher Sharpe (3.70 vs 2.42), indicating better risk-adjusted performance.

A Sharpe above 1.0 is generally considered good, above 2.0 is excellent. Negative Sharpe means the asset underperformed the risk-free rate. Calculated on each asset's full 365-day lookback of available prices and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Sortino Ratio of AAOI and LITE

Sortino Ratio: AAOI vs. LITE

Return per downside volatility

Sortino keeps the return-over-risk idea, but only returns below the target rate count as volatility.

Higher is better

excess return / downside volatility

Formula

\displaystyle \mathrm{Sortino} = \frac{\mathbb{E}[R] - R_f}{\sigma_{\mathrm{down}}}

Sortino ratio measures return per unit of downside risk. Unlike Sharpe, it only counts downside deviation (returns below the target return). LITE had better downside-adjusted returns.

A higher Sortino is better. It's useful when upside volatility is common (crypto is the obvious example). Downside deviation: AAOI 69.1% vs LITE 46.3%. Calculated on each asset's full 365-day lookback of available prices, using the daily risk-free rate as the target return, and annualized using the asset calendar (365 for crypto, 252 trading days for equities/ETFs/metals).

Calmar Ratio of AAOI and LITE

Calmar Ratio: AAOI vs. LITE

CAGR per worst drawdown

Calmar compares CAGR against the single deepest peak-to-trough loss over the period.

Higher is better

CAGR / max drawdown

Formula

\displaystyle \mathrm{Calmar} = \frac{\mathrm{CAGR}}{|\mathrm{MaxDD}|}

Calmar ratio compares CAGR to maximum drawdown. Higher Calmar means more return per unit of worst drawdown. LITE posted the higher Calmar ratio.

Calmar is computed on each asset's full 365-day lookback and uses the max drawdown over that same window.

Sterling Ratio of AAOI and LITE

Sterling Ratio: AAOI vs. LITE

Return per average drawdown

Sterling smooths the drawdown penalty by using average drawdown events instead of only the worst one.

Higher is better

excess annual return / average deep drawdown

Formula

\displaystyle \mathrm{Sterling} = \frac{\mathrm{CAGR} - R_f}{\overline{D}_{>10\%}}

Sterling ratio measures excess return per unit of average drawdown (typically drawdowns worse than 10%). LITE posted the higher Sterling ratio.

Sterling uses average drawdown events deeper than 10% and subtracts the risk-free rate to report excess return.

Treynor Ratio of AAOI and LITE

Treynor Ratio: AAOI vs. LITE

Excess return per market beta

Treynor divides excess annualized return by beta — the sensitivity of the asset to broad-market moves. The slope shown is each asset’s beta vs SPY.

Higher is better

excess return / market beta

Formula

\displaystyle \mathrm{Treynor} = \frac{\mathbb{E}[R] - R_f}{\beta}

Treynor ratio measures excess return per unit of market risk (beta) instead of total volatility. LITE posted the higher Treynor ratio.

Treynor uses beta vs the S&P 500 (SPY) on shared dates and the average 3-month Treasury rate as the risk-free rate.

Ulcer Index of AAOI and LITE

Ulcer Index: AAOI vs. LITE

Drawdown pain

Ulcer Index is a risk index, not a return-over-risk ratio. Lower means smaller and shorter drawdowns.

Lower is better

root-mean-square drawdown

Formula

\displaystyle \mathrm{UI} = \sqrt{\mathbb{E}[D_t^2]}

Ulcer Index captures drawdown depth and duration. Lower Ulcer Index means less drawdown pain. LITE had the lower Ulcer Index (less drawdown pain).

Ulcer Index is computed from each asset's drawdown series over the full lookback window.

Tail Risk & Distribution Shape (1-Year): Applied Optoelectronics vs. Lumentum Holdings

This section looks at the shape of daily returns, not just the average. Tail stats are computed per asset on its own daily series (crypto includes weekends). We use daily log returns $\ln\left(\frac{P_t}{P_{t-1}}\right)$ so multi-day moves add cleanly.

Definitions: Value at Risk (VaR), Expected Shortfall, skew, kurtosis, and fat tails.

Tail Risk & Distribution Shape: AAOI vs. LITE (1-Year)

Actual daily return tails

The bars are real daily log-return observations from the article window. Darker bars are observations at or beyond each asset’s 5% VaR cutoff.

Observed returns

VaR marks the 5th percentile loss cutoff; Expected Shortfall averages the observations beyond that cutoff.

Formula

\displaystyle \mathrm{VaR}_{5\%}=Q_{0.05}(r_t),\quad \mathrm{ES}_{5\%}=\mathbb{E}[r_t\mid r_t\le \mathrm{VaR}_{5\%}]

Metric (1-Year)	AAOI	LITE
5% VaR (daily log return)	-11.68%	-7.07%
5% Expected Shortfall (CVaR)	-14.38% (worst 13 days)	-10.68% (worst 13 days)
Skew	0.85	-0.09
Excess kurtosis	3.46	1.69
2σ tail days (down / up)	4 / 9	8 / 4
Worst day	-16.39% (2026-03-12)	-14.19% (2026-03-06)
Best day	+56.88% (2026-02-27)	+23.57% (2025-11-05)

Downside co-moves (2σ) — 1-Year

Computed on shared dates only (n=249). A “2σ downside move” means a shared-close log return more than 2 standard deviations below that asset’s own mean on this shared-date series. Dates below show simple returns (%) for readability.

Downside co-move map: AAOI vs. LITE (2σ)

Shared-close daily returns

Dots mark actual downside days: asset-colored dots are one-sided downside moves, and red dots are joint downside days. Grey dots add sampled shared-return context when available. The shaded lower-left zone shows where both AAOI and LITE crossed their own 2σ downside threshold.

2σ

Show downside tail dates

Dates below are shared-date observations. The “Date” is the period end (close). Tail thresholds are computed on log returns, but the table shows simple returns (%) for readability. Returns are computed from the previous shared close to this one (for example, Friday → Monday includes weekend moves).

Days when both AAOI and LITE had a big down day (2σ)

Date (interval)	AAOI	LITE
2026-03-20	-14.11%	-8.52%
2026-03-26	-14.85%	-11.37%

Days when AAOI had a big down day

Date (interval)	AAOI	LITE
2025-10-10	-16.13%	-6.35%
2026-03-12	-16.39%	-8.32%
2026-03-20	-14.11%	-8.52%
2026-03-26	-14.85%	-11.37%

Days when LITE had a big down day

Date (interval)	AAOI	LITE
2025-11-13	-12.66%	-10.62%
2025-11-20	-6.61%	-13.27%
2025-12-12	-11.73%	-12.83%
2026-01-08	-13.26%	-11.36%
2026-03-03	-6.99%	-11.34%
2026-03-06	-5.50%	-14.19%
2026-03-20	-14.11%	-8.52%
2026-03-26	-14.85%	-11.37%

Read this as “how ugly the ugly days get”, not as a precise forecast. One-year samples are small, so tail estimates are inherently noisy.

Full Comparison of Applied Optoelectronics vs. Lumentum Holdings (1-Year)

Metric	AAOI	LITE
Total Return	+996.6%	+1311.5%
Annualized Volatility	132.6%	80.1%
Sharpe Ratio	2.42	3.70
Sortino Ratio	4.64	6.41
Calmar Ratio	21.27	46.51
Sterling Ratio	47.05	81.05
Treynor Ratio	0.78	1.14
Ulcer Index	16.87%	6.55%
Max Drawdown	-47.6%	-28.7%
Avg Correlation to S&P 500	0.45	0.45
5% VaR (daily log return)	-11.68%	-7.07%
5% Expected Shortfall (CVaR)	-14.38%	-10.68%
Skew	0.85	-0.09
Excess kurtosis	3.46	1.69
2σ tail days (down / up)	4 / 9	8 / 4

Audit this calculation

Formulas, inputs, and conventions used to compute the metrics on this page.

Inputs & conventions

Shared window for pair metrics: 2025-04-25 → 2026-04-23 (last shared close).
Rolling correlation sample (shared closes): 220 rolling 30-day values (from 249 shared daily returns).
Annualization (days/year): AAOI: 252 days/year; LITE: 252 days/year.
Risk-free rate: Uses the 3-month U.S. Treasury yield (FRED: DGS3MO), averaged over each asset’s window:

AAOI: 4.17% over 2025-04-25 → 2026-04-23.

LITE: 4.17% over 2025-04-25 → 2026-04-23.
Volatility drag (rule of thumb): Estimated from annualized volatility (simple returns). For the log-return framing, see Log returns.

AAOI: ≈ -87.9%/yr

LITE: ≈ -32.1%/yr
Data alignment: No forward fill. Correlation and tail co-moves are computed on shared closes only.
For cross-calendar pairs (e.g., crypto vs stocks), weekend/holiday moves roll into the next shared close.
Return conventions: Volatility/Sharpe/Sortino use simple daily returns. Tail-risk uses daily log returns for distribution stats (but tables show simple returns). Log returns.

Formulas

Daily simple return

r_t = \frac{P_t}{P_{t-1}} - 1

Volatility

\sigma_{ann} = \sigma(r_t)\sqrt{A}

Volatility drag (approx.)

\text{drag} \approx \tfrac{1}{2}\sigma_{ann}^2

Sharpe Ratio

S = \frac{A\,\bar{r} - r_f}{\sigma(r_t)\sqrt{A}}

Sortino Ratio

So = \frac{A\,\bar{r} - r_f}{\sqrt{\mathbb{E}[\min(0,\,r_t - r_f/A)^2]}\,\sqrt{A}}

Maximum Drawdown

MDD = \min_t\left(\frac{P_t}{\max_{s \le t} P_s} - 1\right)

Average Correlation

\rho = \frac{\operatorname{cov}(r^A,\,r^B)}{\sigma_A\,\sigma_B}

Log returns

\ell_t = \ln\left(\frac{P_t}{P_{t-1}}\right)

Notation

$P_t$: Price on day t.
$r_t$: Simple daily return.
$\ell_t$: Log daily return.
$\bar{r}$: Average daily return.
$\sigma(r_t)$: Standard deviation of daily returns.
$A$: Annualization factor (days/year).
$r_f$: Annual risk-free rate.

Applied Optoelectronics vs Lumentum Holdings: Frequently Asked Questions

Which has higher volatility: AAOI or LITE?

AAOI showed higher volatility at 132.6% annualized, compared to 80.1% for LITE Over the past year. Higher volatility means larger price swings in both directions.

Does AAOI provide diversification when held with LITE?

AAOI and LITE are moderately correlated over the past year, with an average correlation of 0.51. This offers some diversification benefit, though they still tend to move together during major market moves.

How bad are the worst 5% days for AAOI vs LITE?

Over the past year, AAOI's 5% VaR was -11.68% and its 5% Expected Shortfall was -14.38% (worst 13 days). LITE's were -7.07% and -10.68% (worst 13 days).

Do AAOI and LITE crash together on bad days?

On shared dates (n=249), when LITE has a 2σ down day, AAOI also does 25.0% (2/8 days). In the other direction, when AAOI has one, LITE also does 50.0% (2/4 days).

Which has better risk-adjusted returns: AAOI or LITE?

LITE showed better risk-adjusted performance with a Sharpe ratio of 3.70 versus AAOI's 2.42 Over the past year.

Can AAOI and LITE be combined in a portfolio?

Yes, though allocation sizing matters. Their moderate correlation offers some diversification benefits. AAOI's higher volatility (132.6%) means even small allocations can materially impact overall portfolio risk.

Explore our financial glossary

Which is a better investment: AAOI or LITE?

Share This Comparison of AAOI vs LITE

Relative Performance of AAOI vs LITE (Normalized to 100)

Trade AAOI or LITE

Key Takeaways

Investment Comparison

Applied Optoelectronics vs Lumentum Holdings Performance Over Time

Applied Optoelectronics vs Lumentum Holdings Correlation

Drawdown

Applied Optoelectronics vs Lumentum Holdings Volatility (AAOI vs LITE)

Risk-adjusted ratios

Sharpe Ratio of AAOI and LITE

Sharpe Ratio: AAOI vs. LITE

Sortino Ratio of AAOI and LITE

Sortino Ratio: AAOI vs. LITE

Calmar Ratio of AAOI and LITE

Calmar Ratio: AAOI vs. LITE

Sterling Ratio of AAOI and LITE

Sterling Ratio: AAOI vs. LITE

Treynor Ratio of AAOI and LITE

Treynor Ratio: AAOI vs. LITE

Ulcer Index of AAOI and LITE

Ulcer Index: AAOI vs. LITE

Tail Risk & Distribution Shape (1-Year): Applied Optoelectronics vs. Lumentum Holdings

Tail Risk & Distribution Shape: AAOI vs. LITE (1-Year)

Downside co-moves (2σ) — 1-Year

Downside co-move map: AAOI vs. LITE (2σ)

Days when both AAOI and LITE had a big down day (2σ)

Days when AAOI had a big down day

Days when LITE had a big down day

Full Comparison of Applied Optoelectronics vs. Lumentum Holdings (1-Year)

Inputs & conventions

Formulas

Applied Optoelectronics vs Lumentum Holdings: Frequently Asked Questions

Which has higher volatility: AAOI or LITE?

Does AAOI provide diversification when held with LITE?

How bad are the worst 5% days for AAOI vs LITE?

Do AAOI and LITE crash together on bad days?

Which has better risk-adjusted returns: AAOI or LITE?

Can AAOI and LITE be combined in a portfolio?