Correlation Between Greatek Electronics and Lelon Electronics
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Lelon 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 Greatek Electronics and Lelon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Lelon Electronics Corp, you can compare the effects of market volatilities on Greatek Electronics and Lelon 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 Greatek Electronics with a short position of Lelon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Lelon Electronics.
Diversification Opportunities for Greatek Electronics and Lelon Electronics
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Greatek and Lelon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Lelon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lelon Electronics Corp and Greatek Electronics 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 Greatek Electronics are associated (or correlated) with Lelon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lelon Electronics Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Lelon Electronics go up and down completely randomly.
Pair Corralation between Greatek Electronics and Lelon Electronics
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 2.08 times less return on investment than Lelon Electronics. But when comparing it to its historical volatility, Greatek Electronics is 2.71 times less risky than Lelon Electronics. It trades about 0.36 of its potential returns per unit of risk. Lelon Electronics Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 8,080 in Lelon Electronics Corp on October 23, 2024 and sell it today you would earn a total of 1,490 from holding Lelon Electronics Corp or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Lelon Electronics Corp
Performance |
| Timeline |
| Greatek Electronics |
| Lelon Electronics Corp |
Greatek Electronics and Lelon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Lelon Electronics
The main advantage of trading using opposite Greatek Electronics and Lelon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Lelon 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 Lelon Electronics will offset losses from the drop in Lelon Electronics' long position.| Greatek Electronics vs. Clevo Co | Greatek Electronics vs. Gigastorage Corp | Greatek Electronics vs. KYE Systems Corp | Greatek Electronics vs. AVerMedia Technologies |
| Lelon Electronics vs. TA I Technology Co | Lelon Electronics vs. Walsin Technology Corp | Lelon Electronics vs. Greatek Electronics | Lelon Electronics vs. Pan Jit International |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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