Correlation Between Lite On and Datavan International
Can any of the company-specific risk be diversified away by investing in both Lite On and Datavan International 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 Datavan International 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 Datavan International, you can compare the effects of market volatilities on Lite On and Datavan International 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 Datavan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lite On and Datavan International.
Diversification Opportunities for Lite On and Datavan International
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lite and Datavan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lite On Technology Corp and Datavan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datavan International 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 Datavan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datavan International has no effect on the direction of Lite On i.e., Lite On and Datavan International go up and down completely randomly.
Pair Corralation between Lite On and Datavan International
Assuming the 90 days trading horizon Lite On Technology Corp is expected to generate 0.77 times more return on investment than Datavan International. However, Lite On Technology Corp is 1.3 times less risky than Datavan International. It trades about 0.06 of its potential returns per unit of risk. Datavan International is currently generating about 0.01 per unit of risk. If you would invest 6,027 in Lite On Technology Corp on August 30, 2024 and sell it today you would earn a total of 4,423 from holding Lite On Technology Corp or generate 73.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lite On Technology Corp vs. Datavan International
Performance |
| Timeline |
| Lite On Technology |
| Datavan International |
Lite On and Datavan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lite On and Datavan International
The main advantage of trading using opposite Lite On and Datavan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lite On position performs unexpectedly, Datavan International 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 Datavan International will offset losses from the drop in Datavan International's long position.| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec Corp |
| Datavan International vs. Advantech Co | Datavan International vs. Asustek Computer | Datavan International vs. Lite On Technology Corp | Datavan International vs. Micro Star International 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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