The coherent interference effect between two beam is used with one light beam delayed by a controllably variable time delay with respect to another analogous beam to obtain a convolutional profile of the oscillatory component of the interference amplitude as a function of the time delay, having a peak value representing the performance clearance between a zero-bit and a one-bit. The convolutional profile is represented by a diamond diagram (DD) of the interference amplitude, within the coherence length. The peak value and the size of DD openings are used for characterizing pulsed optical signals by determining at least one of a predefined set of signal parameters, including signal degradation, optical chromatic dispersion, signal coherence length, type of signal modulation, and signal-to-noise ratio. The two-beam interference effect is optionally provided by a free-space Mach Zehnder interferometer, an integrated Mach Zehnder interferometer, a Michelson interferometer, or combinations thereof.