Correlation Between Zeng Hsing and E Lead
Can any of the company-specific risk be diversified away by investing in both Zeng Hsing and E Lead 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 Zeng Hsing and E Lead into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zeng Hsing Industrial and E Lead Electronic Co, you can compare the effects of market volatilities on Zeng Hsing and E Lead 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 Zeng Hsing with a short position of E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zeng Hsing and E Lead.
Diversification Opportunities for Zeng Hsing and E Lead
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zeng and 2497 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Zeng Hsing Industrial and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic and Zeng Hsing 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 Zeng Hsing Industrial are associated (or correlated) with E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Zeng Hsing i.e., Zeng Hsing and E Lead go up and down completely randomly.
Pair Corralation between Zeng Hsing and E Lead
Assuming the 90 days trading horizon Zeng Hsing is expected to generate 4.32 times less return on investment than E Lead. But when comparing it to its historical volatility, Zeng Hsing Industrial is 2.46 times less risky than E Lead. It trades about 0.02 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,900 in E Lead Electronic Co on September 1, 2024 and sell it today you would earn a total of 550.00 from holding E Lead Electronic Co or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zeng Hsing Industrial vs. E Lead Electronic Co
Performance |
| Timeline |
| Zeng Hsing Industrial |
| E Lead Electronic |
Zeng Hsing and E Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zeng Hsing and E Lead
The main advantage of trading using opposite Zeng Hsing and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zeng Hsing position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead's long position.| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
| E Lead vs. Chaintech Technology Corp | E Lead vs. AVerMedia Technologies | E Lead vs. Avision | E Lead vs. Clevo 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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