Correlation Between Inventec Corp and Lite On
Can any of the company-specific risk be diversified away by investing in both Inventec Corp 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 Inventec Corp and Lite On into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inventec Corp and Lite On Technology Corp, you can compare the effects of market volatilities on Inventec Corp 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 Inventec Corp with a short position of Lite On. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inventec Corp and Lite On.
Diversification Opportunities for Inventec Corp and Lite On
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Inventec and Lite is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Inventec Corp 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 Inventec Corp 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 Inventec Corp 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 Inventec Corp i.e., Inventec Corp and Lite On go up and down completely randomly.
Pair Corralation between Inventec Corp and Lite On
Assuming the 90 days trading horizon Inventec Corp is expected to generate 1.06 times more return on investment than Lite On. However, Inventec Corp is 1.06 times more volatile than Lite On Technology Corp. It trades about -0.02 of its potential returns per unit of risk. Lite On Technology Corp is currently generating about -0.03 per unit of risk. If you would invest 5,600 in Inventec Corp on August 25, 2024 and sell it today you would lose (530.00) from holding Inventec Corp or give up 9.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inventec Corp vs. Lite On Technology Corp
Performance |
| Timeline |
| Inventec Corp |
| Lite On Technology |
Inventec Corp and Lite On Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inventec Corp and Lite On
The main advantage of trading using opposite Inventec Corp and Lite On positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inventec Corp 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.| Inventec Corp vs. Compal Electronics | Inventec Corp vs. Quanta Computer | Inventec Corp vs. Wistron Corp | Inventec Corp vs. Lite On Technology 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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