Correlation Between Lealea Enterprise and Oriental Union
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Oriental Union 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 Oriental Union 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 Oriental Union Chemical, you can compare the effects of market volatilities on Lealea Enterprise and Oriental Union 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 Oriental Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Oriental Union.
Diversification Opportunities for Lealea Enterprise and Oriental Union
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lealea and Oriental is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Oriental Union Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Union Chemical 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 Oriental Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Union Chemical has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Oriental Union go up and down completely randomly.
Pair Corralation between Lealea Enterprise and Oriental Union
Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 0.93 times more return on investment than Oriental Union. However, Lealea Enterprise Co is 1.08 times less risky than Oriental Union. It trades about 0.09 of its potential returns per unit of risk. Oriental Union Chemical is currently generating about -0.43 per unit of risk. If you would invest 915.00 in Lealea Enterprise Co on August 28, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lealea Enterprise Co vs. Oriental Union Chemical
Performance |
| Timeline |
| Lealea Enterprise |
| Oriental Union Chemical |
Lealea Enterprise and Oriental Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lealea Enterprise and Oriental Union
The main advantage of trading using opposite Lealea Enterprise and Oriental Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise position performs unexpectedly, Oriental Union 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 Oriental Union will offset losses from the drop in Oriental Union'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 |
| Oriental Union vs. China Man Made Fiber | Oriental Union vs. Taiwan Styrene Monomer | Oriental Union vs. USI Corp | Oriental Union vs. China Petrochemical Development |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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