Correlation Between LEADCORP and HANA Micron
Can any of the company-specific risk be diversified away by investing in both LEADCORP and HANA Micron 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 HANA Micron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The LEADCORP and HANA Micron, you can compare the effects of market volatilities on LEADCORP and HANA Micron 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 HANA Micron. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEADCORP and HANA Micron.
Diversification Opportunities for LEADCORP and HANA Micron
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LEADCORP and HANA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding The LEADCORP and HANA Micron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HANA Micron 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 HANA Micron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HANA Micron has no effect on the direction of LEADCORP i.e., LEADCORP and HANA Micron go up and down completely randomly.
Pair Corralation between LEADCORP and HANA Micron
Assuming the 90 days trading horizon The LEADCORP is expected to generate 0.31 times more return on investment than HANA Micron. However, The LEADCORP is 3.26 times less risky than HANA Micron. It trades about -0.06 of its potential returns per unit of risk. HANA Micron is currently generating about -0.26 per unit of risk. If you would invest 430,500 in The LEADCORP on September 1, 2024 and sell it today you would lose (5,000) from holding The LEADCORP or give up 1.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
The LEADCORP vs. HANA Micron
Performance |
| Timeline |
| LEADCORP |
| HANA Micron |
LEADCORP and HANA Micron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEADCORP and HANA Micron
The main advantage of trading using opposite LEADCORP and HANA Micron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEADCORP position performs unexpectedly, HANA Micron 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 HANA Micron will offset losses from the drop in HANA Micron's long position.| LEADCORP vs. Nice Information Telecommunication | LEADCORP vs. HB Technology TD | LEADCORP vs. Daou Technology | LEADCORP vs. Konan Technology |
| HANA Micron vs. Shinil Electronics Co | HANA Micron vs. Miwon Chemical | HANA Micron vs. DAEDUCK ELECTRONICS CoLtd | HANA Micron vs. TK Chemical |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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