Correlation Between Lite On and Lingsen Precision
Can any of the company-specific risk be diversified away by investing in both Lite On and Lingsen Precision 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 Lingsen Precision 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 Lingsen Precision Industries, you can compare the effects of market volatilities on Lite On and Lingsen Precision 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 Lingsen Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Lingsen Precision.
Diversification Opportunities for Lite On and Lingsen Precision
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lite and Lingsen is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Lingsen Precision Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingsen Precision 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 Lingsen Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingsen Precision has no effect on the direction of Lite On i.e., Lite On and Lingsen Precision go up and down completely randomly.
Pair Corralation between Lite On and Lingsen Precision
Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 1.0 times more return on investment than Lingsen Precision. However, Lite On Technology Corp is 1.0 times less risky than Lingsen Precision. It trades about 0.05 of its potential returns per unit of risk. Lingsen Precision Industries is currently generating about 0.03 per unit of risk. If you would invest 7,238 in Lite On Technology Corp on November 28, 2024 and sell it today you would earn a total of 3,912 from holding Lite On Technology Corp or generate 54.05% 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. Lingsen Precision Industries
Performance |
| Timeline |
| Lite On Technology |
| Lingsen Precision |
Lite On and Lingsen Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Lingsen Precision
The main advantage of trading using opposite Lite On and Lingsen Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Lingsen Precision 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 Lingsen Precision will offset losses from the drop in Lingsen Precision's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Lingsen Precision vs. Yi Jinn Industrial | Lingsen Precision vs. Holiday Entertainment Co | Lingsen Precision vs. Sports Gear Co | Lingsen Precision vs. General Plastic Industrial |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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