Correlation Between LEADCORP and Stic Investments
Can any of the company-specific risk be diversified away by investing in both LEADCORP and Stic Investments 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 LEADCORP and Stic Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The LEADCORP and Stic Investments, you can compare the effects of market volatilities on LEADCORP and Stic Investments 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 LEADCORP with a short position of Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEADCORP and Stic Investments.
Diversification Opportunities for LEADCORP and Stic Investments
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEADCORP and Stic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding The LEADCORP and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments and LEADCORP 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 The LEADCORP are associated (or correlated) with Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of LEADCORP i.e., LEADCORP and Stic Investments go up and down completely randomly.
Pair Corralation between LEADCORP and Stic Investments
Assuming the 90 days trading horizon The LEADCORP is expected to under-perform the Stic Investments. But the stock apears to be less risky and, when comparing its historical volatility, The LEADCORP is 2.6 times less risky than Stic Investments. The stock trades about -0.13 of its potential returns per unit of risk. The Stic Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 809,000 in Stic Investments on September 3, 2024 and sell it today you would earn a total of 19,000 from holding Stic Investments or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The LEADCORP vs. Stic Investments
Performance |
| Timeline |
| LEADCORP |
| Stic Investments |
LEADCORP and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEADCORP and Stic Investments
The main advantage of trading using opposite LEADCORP and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEADCORP position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.The idea behind The LEADCORP and Stic Investments 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.| Stic Investments vs. Asiana Airlines | Stic Investments vs. Daishin Information Communications | Stic Investments vs. Ssangyong Information Communication | Stic Investments vs. Nable Communications |
Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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