Correlation Between Lee Chi and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Lee Chi and Allis Electric 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 Lee Chi and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Chi Enterprises and Allis Electric Co, you can compare the effects of market volatilities on Lee Chi and Allis Electric 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 Lee Chi with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Chi and Allis Electric.
Diversification Opportunities for Lee Chi and Allis Electric
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lee and Allis is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Lee Chi Enterprises and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Lee Chi 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 Lee Chi Enterprises are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Lee Chi i.e., Lee Chi and Allis Electric go up and down completely randomly.
Pair Corralation between Lee Chi and Allis Electric
Assuming the 90 days trading horizon Lee Chi Enterprises is expected to under-perform the Allis Electric. But the stock apears to be less risky and, when comparing its historical volatility, Lee Chi Enterprises is 2.84 times less risky than Allis Electric. The stock trades about -0.25 of its potential returns per unit of risk. The Allis Electric Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 11,200 in Allis Electric Co on September 4, 2024 and sell it today you would lose (200.00) from holding Allis Electric Co or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lee Chi Enterprises vs. Allis Electric Co
Performance |
| Timeline |
| Lee Chi Enterprises |
| Allis Electric |
Lee Chi and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Chi and Allis Electric
The main advantage of trading using opposite Lee Chi and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Chi position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Lee Chi vs. Tainan Spinning Co | Lee Chi vs. Chia Her Industrial | Lee Chi vs. WiseChip Semiconductor | Lee Chi vs. Novatek Microelectronics Corp |
| Allis Electric vs. Universal Microelectronics Co | Allis Electric vs. AVerMedia Technologies | Allis Electric vs. Symtek Automation Asia | Allis Electric vs. WiseChip Semiconductor |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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