Correlation Between Lee Chi and Everlight Chemical
Can any of the company-specific risk be diversified away by investing in both Lee Chi and Everlight Chemical 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 Everlight Chemical 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 Everlight Chemical Industrial, you can compare the effects of market volatilities on Lee Chi and Everlight Chemical 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 Everlight Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Chi and Everlight Chemical.
Diversification Opportunities for Lee Chi and Everlight Chemical
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lee and Everlight is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lee Chi Enterprises and Everlight Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Chemical 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 Everlight Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Chemical has no effect on the direction of Lee Chi i.e., Lee Chi and Everlight Chemical go up and down completely randomly.
Pair Corralation between Lee Chi and Everlight Chemical
Assuming the 90 days trading horizon Lee Chi Enterprises is expected to generate 0.62 times more return on investment than Everlight Chemical. However, Lee Chi Enterprises is 1.63 times less risky than Everlight Chemical. It trades about 0.34 of its potential returns per unit of risk. Everlight Chemical Industrial is currently generating about 0.09 per unit of risk. If you would invest 1,340 in Lee Chi Enterprises on November 28, 2024 and sell it today you would earn a total of 90.00 from holding Lee Chi Enterprises or generate 6.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lee Chi Enterprises vs. Everlight Chemical Industrial
Performance |
| Timeline |
| Lee Chi Enterprises |
| Everlight Chemical |
Lee Chi and Everlight Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Chi and Everlight Chemical
The main advantage of trading using opposite Lee Chi and Everlight Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Chi position performs unexpectedly, Everlight Chemical 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 Everlight Chemical will offset losses from the drop in Everlight Chemical's long position.| Lee Chi vs. Anderson Industrial Corp | Lee Chi vs. Kaulin Mfg | Lee Chi vs. Awea Mechantronic Co | Lee Chi vs. Everlight Chemical Industrial |
| Everlight Chemical vs. Oriental Union Chemical | Everlight Chemical vs. Ho Tung Chemical | Everlight Chemical vs. China Man Made Fiber | Everlight Chemical vs. Sunko Ink 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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