Correlation Between K Laser and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both K Laser and Leatec Fine 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 K Laser and Leatec Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K Laser Technology and Leatec Fine Ceramics, you can compare the effects of market volatilities on K Laser and Leatec Fine 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 K Laser with a short position of Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of K Laser and Leatec Fine.
Diversification Opportunities for K Laser and Leatec Fine
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2461 and Leatec is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding K Laser Technology and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics and K Laser 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 K Laser Technology are associated (or correlated) with Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of K Laser i.e., K Laser and Leatec Fine go up and down completely randomly.
Pair Corralation between K Laser and Leatec Fine
Assuming the 90 days trading horizon K Laser is expected to generate 10.22 times less return on investment than Leatec Fine. But when comparing it to its historical volatility, K Laser Technology is 1.68 times less risky than Leatec Fine. It trades about 0.01 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,900 in Leatec Fine Ceramics on November 27, 2024 and sell it today you would earn a total of 725.00 from holding Leatec Fine Ceramics or generate 38.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
K Laser Technology vs. Leatec Fine Ceramics
Performance |
| Timeline |
| K Laser Technology |
| Leatec Fine Ceramics |
K Laser and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K Laser and Leatec Fine
The main advantage of trading using opposite K Laser and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K Laser position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine's long position.| K Laser vs. Ichia Technologies | K Laser vs. Gem Terminal Industry | K Laser vs. Zinwell | K Laser vs. Infortrend Technology |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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