Correlation Between Lite On and Microelectronics
Can any of the company-specific risk be diversified away by investing in both Lite On and Microelectronics 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 Lite On and Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lite On Technology Corp and Microelectronics Technology, you can compare the effects of market volatilities on Lite On and Microelectronics 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 Lite On with a short position of Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Microelectronics.
Diversification Opportunities for Lite On and Microelectronics
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lite and Microelectronics is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Microelectronics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microelectronics Tec and Lite On 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 Lite On Technology Corp are associated (or correlated) with Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microelectronics Tec has no effect on the direction of Lite On i.e., Lite On and Microelectronics go up and down completely randomly.
Pair Corralation between Lite On and Microelectronics
Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 0.57 times more return on investment than Microelectronics. However, Lite On Technology Corp is 1.75 times less risky than Microelectronics. It trades about 0.19 of its potential returns per unit of risk. Microelectronics Technology is currently generating about -0.13 per unit of risk. If you would invest 10,750 in Lite On Technology Corp on November 28, 2024 and sell it today you would earn a total of 400.00 from holding Lite On Technology Corp or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lite On Technology Corp vs. Microelectronics Technology
Performance |
| Timeline |
| Lite On Technology |
| Microelectronics Tec |
Lite On and Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Microelectronics
The main advantage of trading using opposite Lite On and Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Microelectronics 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 Microelectronics will offset losses from the drop in Microelectronics' long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Microelectronics vs. D Link Corp | Microelectronics vs. Accton Technology Corp | Microelectronics vs. Macronix International Co | Microelectronics vs. Ritek Corp |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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