Correlation Between Rectron and Lite On
Can any of the company-specific risk be diversified away by investing in both Rectron and Lite On 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 Rectron and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rectron and Lite On Technology Corp, you can compare the effects of market volatilities on Rectron and Lite On 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 Rectron with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rectron and Lite On.
Diversification Opportunities for Rectron and Lite On
Very weak diversification
The 3 months correlation between Rectron and Lite is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Rectron and Lite On Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lite On Technology and Rectron 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 Rectron are associated (or correlated) with Lite On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lite On Technology has no effect on the direction of Rectron i.e., Rectron and Lite On go up and down completely randomly.
Pair Corralation between Rectron and Lite On
Assuming the 90 days trading horizon Rectron is expected to generate 1.47 times more return on investment than Lite On. However, Rectron is 1.47 times more volatile than Lite On Technology Corp. It trades about 0.13 of its potential returns per unit of risk. Lite On Technology Corp is currently generating about 0.08 per unit of risk. If you would invest 1,835 in Rectron on September 2, 2024 and sell it today you would earn a total of 140.00 from holding Rectron or generate 7.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rectron vs. Lite On Technology Corp
Performance |
| Timeline |
| Rectron |
| Lite On Technology |
Rectron and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rectron and Lite On
The main advantage of trading using opposite Rectron and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rectron position performs unexpectedly, Lite On 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 Lite On will offset losses from the drop in Lite On's long position.| Rectron vs. Microelectronics Technology | Rectron vs. Lite On Technology Corp | Rectron vs. Mosel Vitelic | Rectron vs. Orient Semiconductor Electronics |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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