Correlation Between LEADCORP and Okins Electronics
Can any of the company-specific risk be diversified away by investing in both LEADCORP and Okins Electronics 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 Okins Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The LEADCORP and Okins Electronics Co, you can compare the effects of market volatilities on LEADCORP and Okins Electronics 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 Okins Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEADCORP and Okins Electronics.
Diversification Opportunities for LEADCORP and Okins Electronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEADCORP and Okins is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The LEADCORP and Okins Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okins Electronics 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 Okins Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okins Electronics has no effect on the direction of LEADCORP i.e., LEADCORP and Okins Electronics go up and down completely randomly.
Pair Corralation between LEADCORP and Okins Electronics
Assuming the 90 days trading horizon The LEADCORP is expected to generate 0.28 times more return on investment than Okins Electronics. However, The LEADCORP is 3.6 times less risky than Okins Electronics. It trades about -0.3 of its potential returns per unit of risk. Okins Electronics Co is currently generating about -0.25 per unit of risk. If you would invest 460,500 in The LEADCORP on August 29, 2024 and sell it today you would lose (37,500) from holding The LEADCORP or give up 8.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.5% |
| Values | Daily Returns |
The LEADCORP vs. Okins Electronics Co
Performance |
| Timeline |
| LEADCORP |
| Okins Electronics |
LEADCORP and Okins Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEADCORP and Okins Electronics
The main advantage of trading using opposite LEADCORP and Okins Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEADCORP position performs unexpectedly, Okins Electronics 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 Okins Electronics will offset losses from the drop in Okins Electronics' long position.| LEADCORP vs. Cube Entertainment | LEADCORP vs. Dreamus Company | LEADCORP vs. LG Energy Solution | LEADCORP vs. Dongwon System |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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