Correlation Between Lealea Enterprise and China General
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and China General 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 Lealea Enterprise and China General into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lealea Enterprise Co and China General Plastics, you can compare the effects of market volatilities on Lealea Enterprise and China General 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 Lealea Enterprise with a short position of China General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and China General.
Diversification Opportunities for Lealea Enterprise and China General
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lealea and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and China General Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China General Plastics and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with China General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China General Plastics has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and China General go up and down completely randomly.
Pair Corralation between Lealea Enterprise and China General
Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 0.67 times more return on investment than China General. However, Lealea Enterprise Co is 1.5 times less risky than China General. It trades about -0.03 of its potential returns per unit of risk. China General Plastics is currently generating about -0.09 per unit of risk. If you would invest 1,090 in Lealea Enterprise Co on September 12, 2024 and sell it today you would lose (150.00) from holding Lealea Enterprise Co or give up 13.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lealea Enterprise Co vs. China General Plastics
Performance |
| Timeline |
| Lealea Enterprise |
| China General Plastics |
Lealea Enterprise and China General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lealea Enterprise and China General
The main advantage of trading using opposite Lealea Enterprise and China General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise position performs unexpectedly, China General 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 China General will offset losses from the drop in China General's long position.| Lealea Enterprise vs. Feng Tay Enterprises | Lealea Enterprise vs. Ruentex Development Co | Lealea Enterprise vs. WiseChip Semiconductor | Lealea Enterprise vs. Novatek Microelectronics Corp |
| China General vs. Tainan Spinning Co | China General vs. Lealea Enterprise Co | China General vs. China Petrochemical Development | China General vs. Ruentex Development 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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