Correlation Between Chroma ATE and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Chroma ATE and Ligitek Electronics 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 Chroma ATE and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chroma ATE and Ligitek Electronics Co, you can compare the effects of market volatilities on Chroma ATE and Ligitek Electronics 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 Chroma ATE with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chroma ATE and Ligitek Electronics.
Diversification Opportunities for Chroma ATE and Ligitek Electronics
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chroma and Ligitek is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chroma ATE and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Chroma ATE 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 Chroma ATE are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Chroma ATE i.e., Chroma ATE and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Chroma ATE and Ligitek Electronics
Assuming the 90 days trading horizon Chroma ATE is expected to generate 0.91 times more return on investment than Ligitek Electronics. However, Chroma ATE is 1.09 times less risky than Ligitek Electronics. It trades about -0.01 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about -0.23 per unit of risk. If you would invest 41,800 in Chroma ATE on August 26, 2024 and sell it today you would lose (600.00) from holding Chroma ATE or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chroma ATE vs. Ligitek Electronics Co
Performance |
| Timeline |
| Chroma ATE |
| Ligitek Electronics |
Chroma ATE and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chroma ATE and Ligitek Electronics
The main advantage of trading using opposite Chroma ATE and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chroma ATE position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Chroma ATE vs. Accton Technology Corp | Chroma ATE vs. Delta Electronics | Chroma ATE vs. Chicony Electronics Co | Chroma ATE vs. Advantech Co |
| Ligitek Electronics vs. Unique Optical Industrial | Ligitek Electronics vs. Powertech Industrial Co | Ligitek Electronics vs. Insyde Software | Ligitek Electronics vs. Central Reinsurance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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