Correlation Between LEENO Industrial and Union Materials
Can any of the company-specific risk be diversified away by investing in both LEENO Industrial and Union Materials 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 LEENO Industrial and Union Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEENO Industrial and Union Materials Corp, you can compare the effects of market volatilities on LEENO Industrial and Union Materials 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 LEENO Industrial with a short position of Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEENO Industrial and Union Materials.
Diversification Opportunities for LEENO Industrial and Union Materials
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between LEENO and Union is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding LEENO Industrial and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp and LEENO Industrial 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 LEENO Industrial are associated (or correlated) with Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of LEENO Industrial i.e., LEENO Industrial and Union Materials go up and down completely randomly.
Pair Corralation between LEENO Industrial and Union Materials
Assuming the 90 days trading horizon LEENO Industrial is expected to generate 0.88 times more return on investment than Union Materials. However, LEENO Industrial is 1.14 times less risky than Union Materials. It trades about 0.17 of its potential returns per unit of risk. Union Materials Corp is currently generating about 0.05 per unit of risk. If you would invest 19,140,800 in LEENO Industrial on November 23, 2024 and sell it today you would earn a total of 3,459,200 from holding LEENO Industrial or generate 18.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEENO Industrial vs. Union Materials Corp
Performance |
| Timeline |
| LEENO Industrial |
| Union Materials Corp |
LEENO Industrial and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEENO Industrial and Union Materials
The main advantage of trading using opposite LEENO Industrial and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEENO Industrial position performs unexpectedly, Union Materials 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 Union Materials will offset losses from the drop in Union Materials' long position.| LEENO Industrial vs. Tokai Carbon Korea | ||
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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