Correlation Between Lee Ku and Haitai Confectionery
Can any of the company-specific risk be diversified away by investing in both Lee Ku and Haitai Confectionery 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 Lee Ku and Haitai Confectionery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Ku Industrial and Haitai Confectionery Foods, you can compare the effects of market volatilities on Lee Ku and Haitai Confectionery 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 Lee Ku with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Ku and Haitai Confectionery.
Diversification Opportunities for Lee Ku and Haitai Confectionery
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lee and Haitai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lee Ku Industrial and Haitai Confectionery Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haitai Confectionery and Lee Ku 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 Lee Ku Industrial are associated (or correlated) with Haitai Confectionery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haitai Confectionery has no effect on the direction of Lee Ku i.e., Lee Ku and Haitai Confectionery go up and down completely randomly.
Pair Corralation between Lee Ku and Haitai Confectionery
Assuming the 90 days trading horizon Lee Ku Industrial is expected to generate 1.25 times more return on investment than Haitai Confectionery. However, Lee Ku is 1.25 times more volatile than Haitai Confectionery Foods. It trades about 0.13 of its potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.02 per unit of risk. If you would invest 415,000 in Lee Ku Industrial on October 17, 2024 and sell it today you would earn a total of 18,500 from holding Lee Ku Industrial or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lee Ku Industrial vs. Haitai Confectionery Foods
Performance |
| Timeline |
| Lee Ku Industrial |
| Haitai Confectionery |
Lee Ku and Haitai Confectionery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Ku and Haitai Confectionery
The main advantage of trading using opposite Lee Ku and Haitai Confectionery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Ku position performs unexpectedly, Haitai Confectionery 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 Haitai Confectionery will offset losses from the drop in Haitai Confectionery's long position.| Lee Ku vs. Haitai Confectionery Foods | Lee Ku vs. Orbitech Co | Lee Ku vs. KMH Hitech Co | Lee Ku vs. Samyang Foods Co |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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