Correlation Between Lealea Enterprise and Li Peng
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Li Peng 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 Li Peng 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 Li Peng Enterprise, you can compare the effects of market volatilities on Lealea Enterprise and Li Peng 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 Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Li Peng.
Diversification Opportunities for Lealea Enterprise and Li Peng
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lealea and 1447 is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise 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 Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Li Peng go up and down completely randomly.
Pair Corralation between Lealea Enterprise and Li Peng
Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 0.52 times more return on investment than Li Peng. However, Lealea Enterprise Co is 1.91 times less risky than Li Peng. It trades about 0.09 of its potential returns per unit of risk. Li Peng Enterprise is currently generating about -0.08 per unit of risk. If you would invest 915.00 in Lealea Enterprise Co on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Lealea Enterprise Co or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lealea Enterprise Co vs. Li Peng Enterprise
Performance |
| Timeline |
| Lealea Enterprise |
| Li Peng Enterprise |
Lealea Enterprise and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lealea Enterprise and Li Peng
The main advantage of trading using opposite Lealea Enterprise and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.| Lealea Enterprise vs. Taiwan Semiconductor Manufacturing | Lealea Enterprise vs. Hon Hai Precision | Lealea Enterprise vs. MediaTek | Lealea Enterprise vs. Chunghwa Telecom Co |
| Li Peng vs. Taiwan Semiconductor Manufacturing | Li Peng vs. Hon Hai Precision | Li Peng vs. MediaTek | Li Peng vs. Chunghwa Telecom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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