Correlation Between I-Components and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both I-Components and Leaders Technology 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 I-Components and Leaders Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between i Components Co and Leaders Technology Investment, you can compare the effects of market volatilities on I-Components and Leaders Technology 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 I-Components with a short position of Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of I-Components and Leaders Technology.
Diversification Opportunities for I-Components and Leaders Technology
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between I-Components and Leaders is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology and I-Components 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 i Components Co are associated (or correlated) with Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of I-Components i.e., I-Components and Leaders Technology go up and down completely randomly.
Pair Corralation between I-Components and Leaders Technology
Assuming the 90 days trading horizon i Components Co is expected to generate 0.55 times more return on investment than Leaders Technology. However, i Components Co is 1.83 times less risky than Leaders Technology. It trades about -0.02 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.04 per unit of risk. If you would invest 720,000 in i Components Co on September 26, 2024 and sell it today you would lose (249,500) from holding i Components Co or give up 34.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.1% |
| Values | Daily Returns |
i Components Co vs. Leaders Technology Investment
Performance |
| Timeline |
| i Components |
| Leaders Technology |
I-Components and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I-Components and Leaders Technology
The main advantage of trading using opposite I-Components and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I-Components position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| I-Components vs. Samsung Electronics Co | I-Components vs. Samsung Electronics Co | I-Components vs. LG Energy Solution | I-Components vs. SK Hynix |
| Leaders Technology vs. KB Financial Group | Leaders Technology vs. Shinhan Financial Group | Leaders Technology vs. Hyundai Motor | Leaders Technology vs. Hyundai Motor Co |
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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