Correlation Between Lite On and Inventec Corp
Can any of the company-specific risk be diversified away by investing in both Lite On and Inventec 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 Lite On and Inventec Corp 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 Inventec Corp, you can compare the effects of market volatilities on Lite On and Inventec 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 Lite On with a short position of Inventec Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Inventec Corp.
Diversification Opportunities for Lite On and Inventec Corp
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lite and Inventec is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Inventec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventec Corp 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 Inventec Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventec Corp has no effect on the direction of Lite On i.e., Lite On and Inventec Corp go up and down completely randomly.
Pair Corralation between Lite On and Inventec Corp
Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 1.32 times more return on investment than Inventec Corp. However, Lite On is 1.32 times more volatile than Inventec Corp. It trades about 0.19 of its potential returns per unit of risk. Inventec Corp is currently generating about -0.05 per unit of risk. If you would invest 10,000 in Lite On Technology Corp on October 22, 2024 and sell it today you would earn a total of 700.00 from holding Lite On Technology Corp or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lite On Technology Corp vs. Inventec Corp
Performance |
| Timeline |
| Lite On Technology |
| Inventec Corp |
Lite On and Inventec Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Inventec Corp
The main advantage of trading using opposite Lite On and Inventec Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Inventec 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 Inventec Corp will offset losses from the drop in Inventec Corp's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Inventec Corp vs. Compal Electronics | Inventec Corp vs. Quanta Computer | Inventec Corp vs. Wistron Corp | Inventec Corp vs. Lite On Technology 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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