Correlation Between Quanta Computer and Ledtech Electronics
Can any of the company-specific risk be diversified away by investing in both Quanta Computer and Ledtech 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 Quanta Computer and Ledtech Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Computer and Ledtech Electronics Corp, you can compare the effects of market volatilities on Quanta Computer and Ledtech 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 Quanta Computer with a short position of Ledtech Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Computer and Ledtech Electronics.
Diversification Opportunities for Quanta Computer and Ledtech Electronics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quanta and Ledtech is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Computer and Ledtech Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledtech Electronics Corp and Quanta Computer 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 Quanta Computer are associated (or correlated) with Ledtech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledtech Electronics Corp has no effect on the direction of Quanta Computer i.e., Quanta Computer and Ledtech Electronics go up and down completely randomly.
Pair Corralation between Quanta Computer and Ledtech Electronics
Assuming the 90 days trading horizon Quanta Computer is expected to under-perform the Ledtech Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Quanta Computer is 1.22 times less risky than Ledtech Electronics. The stock trades about -0.11 of its potential returns per unit of risk. The Ledtech Electronics Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Ledtech Electronics Corp on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Ledtech Electronics Corp or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanta Computer vs. Ledtech Electronics Corp
Performance |
| Timeline |
| Quanta Computer |
| Ledtech Electronics Corp |
Quanta Computer and Ledtech Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Computer and Ledtech Electronics
The main advantage of trading using opposite Quanta Computer and Ledtech Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Computer position performs unexpectedly, Ledtech 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 Ledtech Electronics will offset losses from the drop in Ledtech Electronics' long position.| Quanta Computer vs. Compal Electronics | Quanta Computer vs. Asustek Computer | Quanta Computer vs. Delta Electronics | Quanta Computer vs. Inventec Corp |
| Ledtech Electronics vs. Darwin Precisions Corp | Ledtech Electronics vs. Amtran Technology Co | Ledtech Electronics vs. Gigastorage Corp | Ledtech Electronics vs. United Renewable Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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