Correlation Between Li Peng and USI Corp
Can any of the company-specific risk be diversified away by investing in both Li Peng and USI Corp 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 Li Peng and USI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Li Peng Enterprise and USI Corp, you can compare the effects of market volatilities on Li Peng and USI Corp 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 Li Peng with a short position of USI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Li Peng and USI Corp.
Diversification Opportunities for Li Peng and USI Corp
Poor diversification
The 3 months correlation between 1447 and USI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Li Peng Enterprise and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI Corp and Li Peng 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 Li Peng Enterprise are associated (or correlated) with USI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USI Corp has no effect on the direction of Li Peng i.e., Li Peng and USI Corp go up and down completely randomly.
Pair Corralation between Li Peng and USI Corp
Assuming the 90 days trading horizon Li Peng Enterprise is expected to generate 1.0 times more return on investment than USI Corp. However, Li Peng Enterprise is 1.0 times less risky than USI Corp. It trades about 0.0 of its potential returns per unit of risk. USI Corp is currently generating about -0.08 per unit of risk. If you would invest 814.00 in Li Peng Enterprise on August 29, 2024 and sell it today you would lose (30.00) from holding Li Peng Enterprise or give up 3.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Li Peng Enterprise vs. USI Corp
Performance |
| Timeline |
| Li Peng Enterprise |
| USI Corp |
Li Peng and USI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Li Peng and USI Corp
The main advantage of trading using opposite Li Peng and USI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Li Peng position performs unexpectedly, USI Corp 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 USI Corp will offset losses from the drop in USI Corp's long position.| Li Peng vs. Taiwan Semiconductor Manufacturing | Li Peng vs. Hon Hai Precision | Li Peng vs. MediaTek | Li Peng vs. Chunghwa Telecom Co |
| USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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