Correlation Between Lite On and Catcher Technology
Can any of the company-specific risk be diversified away by investing in both Lite On and Catcher Technology 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 Catcher Technology 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 Catcher Technology Co, you can compare the effects of market volatilities on Lite On and Catcher Technology 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 Catcher Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Catcher Technology.
Diversification Opportunities for Lite On and Catcher Technology
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lite and Catcher is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Catcher Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catcher Technology 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 Catcher Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catcher Technology has no effect on the direction of Lite On i.e., Lite On and Catcher Technology go up and down completely randomly.
Pair Corralation between Lite On and Catcher Technology
Assuming the 90 days trading horizon Lite On is expected to generate 1.36 times less return on investment than Catcher Technology. In addition to that, Lite On is 1.62 times more volatile than Catcher Technology Co. It trades about 0.21 of its total potential returns per unit of risk. Catcher Technology Co is currently generating about 0.46 per unit of volatility. If you would invest 19,750 in Catcher Technology Co on November 28, 2024 and sell it today you would earn a total of 1,150 from holding Catcher Technology Co or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lite On Technology Corp vs. Catcher Technology Co
Performance |
| Timeline |
| Lite On Technology |
| Catcher Technology |
Lite On and Catcher Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Catcher Technology
The main advantage of trading using opposite Lite On and Catcher Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Catcher Technology 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 Catcher Technology will offset losses from the drop in Catcher Technology's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Catcher Technology vs. LARGAN Precision Co | Catcher Technology vs. Delta Electronics | Catcher Technology vs. Quanta Computer | Catcher Technology vs. Pegatron 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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