Correlation Between Microelectronics and Lite On
Can any of the company-specific risk be diversified away by investing in both Microelectronics 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 Microelectronics and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microelectronics Technology and Lite On Technology Corp, you can compare the effects of market volatilities on Microelectronics 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 Microelectronics with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microelectronics and Lite On.
Diversification Opportunities for Microelectronics and Lite On
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Microelectronics and Lite is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Microelectronics Technology 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 Microelectronics 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 Microelectronics Technology 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 Microelectronics i.e., Microelectronics and Lite On go up and down completely randomly.
Pair Corralation between Microelectronics and Lite On
Assuming the 90 days trading horizon Microelectronics Technology is expected to under-perform the Lite On. In addition to that, Microelectronics is 1.75 times more volatile than Lite On Technology Corp. It trades about -0.13 of its total potential returns per unit of risk. Lite On Technology Corp is currently generating about 0.19 per unit of volatility. If you would invest 10,750 in Lite On Technology Corp on November 28, 2024 and sell it today you would earn a total of 400.00 from holding Lite On Technology Corp or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microelectronics Technology vs. Lite On Technology Corp
Performance |
| Timeline |
| Microelectronics Tec |
| Lite On Technology |
Microelectronics and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microelectronics and Lite On
The main advantage of trading using opposite Microelectronics and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microelectronics 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.| Microelectronics vs. D Link Corp | Microelectronics vs. Accton Technology Corp | Microelectronics vs. Macronix International Co | Microelectronics vs. Ritek Corp |
| Lite On vs. Compal Electronics | Lite On vs. Delta Electronics | Lite On vs. Quanta Computer | Lite On vs. Inventec 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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