Correlation Between CU Medical and LEENO Industrial
Can any of the company-specific risk be diversified away by investing in both CU Medical and LEENO Industrial 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 CU Medical and LEENO Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CU Medical Systems and LEENO Industrial, you can compare the effects of market volatilities on CU Medical and LEENO Industrial 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 CU Medical with a short position of LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CU Medical and LEENO Industrial.
Diversification Opportunities for CU Medical and LEENO Industrial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 115480 and LEENO is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CU Medical Systems and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial and CU Medical 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 CU Medical Systems are associated (or correlated) with LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of CU Medical i.e., CU Medical and LEENO Industrial go up and down completely randomly.
Pair Corralation between CU Medical and LEENO Industrial
Assuming the 90 days trading horizon CU Medical Systems is expected to under-perform the LEENO Industrial. But the stock apears to be less risky and, when comparing its historical volatility, CU Medical Systems is 1.55 times less risky than LEENO Industrial. The stock trades about -0.07 of its potential returns per unit of risk. The LEENO Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 17,044,300 in LEENO Industrial on September 19, 2024 and sell it today you would earn a total of 1,825,700 from holding LEENO Industrial or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CU Medical Systems vs. LEENO Industrial
Performance |
| Timeline |
| CU Medical Systems |
| LEENO Industrial |
CU Medical and LEENO Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CU Medical and LEENO Industrial
The main advantage of trading using opposite CU Medical and LEENO Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CU Medical position performs unexpectedly, LEENO Industrial 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 LEENO Industrial will offset losses from the drop in LEENO Industrial's long position.| CU Medical vs. Samsung Electronics Co | CU Medical vs. Samsung Electronics Co | CU Medical vs. SK Hynix | CU Medical vs. SK Holdings Co |
| LEENO Industrial vs. Cube Entertainment | LEENO Industrial vs. Dreamus Company | LEENO Industrial vs. LG Energy Solution | LEENO Industrial vs. Dongwon System |
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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