Correlation Between Leaders Technology and JC Chemical
Can any of the company-specific risk be diversified away by investing in both Leaders Technology and JC Chemical 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 Leaders Technology and JC Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leaders Technology Investment and JC Chemical Co, you can compare the effects of market volatilities on Leaders Technology and JC Chemical 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 Leaders Technology with a short position of JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leaders Technology and JC Chemical.
Diversification Opportunities for Leaders Technology and JC Chemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leaders and 137950 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Leaders Technology Investment and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical and Leaders Technology 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 Leaders Technology Investment are associated (or correlated) with JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Leaders Technology i.e., Leaders Technology and JC Chemical go up and down completely randomly.
Pair Corralation between Leaders Technology and JC Chemical
Assuming the 90 days trading horizon Leaders Technology Investment is expected to generate 1.88 times more return on investment than JC Chemical. However, Leaders Technology is 1.88 times more volatile than JC Chemical Co. It trades about -0.16 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.44 per unit of risk. If you would invest 29,300 in Leaders Technology Investment on November 6, 2024 and sell it today you would lose (2,300) from holding Leaders Technology Investment or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leaders Technology Investment vs. JC Chemical Co
Performance |
| Timeline |
| Leaders Technology |
| JC Chemical |
Leaders Technology and JC Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leaders Technology and JC Chemical
The main advantage of trading using opposite Leaders Technology and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leaders Technology position performs unexpectedly, JC Chemical 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 JC Chemical will offset losses from the drop in JC Chemical's long position.| Leaders Technology vs. Barunson Entertainment Arts | Leaders Technology vs. Sam Yang Foods | Leaders Technology vs. Pan Entertainment Co | Leaders Technology vs. Haitai Confectionery Foods |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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