Correlation Between Phihong Technology and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both Phihong Technology and Leadtek Research 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 Phihong Technology and Leadtek Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phihong Technology Co and Leadtek Research, you can compare the effects of market volatilities on Phihong Technology and Leadtek Research 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 Phihong Technology with a short position of Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phihong Technology and Leadtek Research.
Diversification Opportunities for Phihong Technology and Leadtek Research
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Phihong and Leadtek is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Phihong Technology Co and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research and Phihong Technology 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 Phihong Technology Co are associated (or correlated) with Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of Phihong Technology i.e., Phihong Technology and Leadtek Research go up and down completely randomly.
Pair Corralation between Phihong Technology and Leadtek Research
Assuming the 90 days trading horizon Phihong Technology Co is expected to generate 1.42 times more return on investment than Leadtek Research. However, Phihong Technology is 1.42 times more volatile than Leadtek Research. It trades about -0.06 of its potential returns per unit of risk. Leadtek Research is currently generating about -0.31 per unit of risk. If you would invest 3,630 in Phihong Technology Co on November 5, 2024 and sell it today you would lose (100.00) from holding Phihong Technology Co or give up 2.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phihong Technology Co vs. Leadtek Research
Performance |
| Timeline |
| Phihong Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Leadtek Research |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Phihong Technology and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phihong Technology and Leadtek Research
The main advantage of trading using opposite Phihong Technology and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phihong Technology position performs unexpectedly, Leadtek Research 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 Leadtek Research will offset losses from the drop in Leadtek Research's long position.The idea behind Phihong Technology Co and Leadtek Research pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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