Correlation Between Leadtek Research and Ares International
Can any of the company-specific risk be diversified away by investing in both Leadtek Research and Ares International 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 Leadtek Research and Ares International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leadtek Research and Ares International Corp, you can compare the effects of market volatilities on Leadtek Research and Ares International 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 Leadtek Research with a short position of Ares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leadtek Research and Ares International.
Diversification Opportunities for Leadtek Research and Ares International
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leadtek and Ares is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Leadtek Research and Ares International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares International Corp and Leadtek Research 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 Leadtek Research are associated (or correlated) with Ares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares International Corp has no effect on the direction of Leadtek Research i.e., Leadtek Research and Ares International go up and down completely randomly.
Pair Corralation between Leadtek Research and Ares International
Assuming the 90 days trading horizon Leadtek Research is expected to under-perform the Ares International. In addition to that, Leadtek Research is 1.1 times more volatile than Ares International Corp. It trades about -0.31 of its total potential returns per unit of risk. Ares International Corp is currently generating about -0.28 per unit of volatility. If you would invest 5,430 in Ares International Corp on November 5, 2024 and sell it today you would lose (390.00) from holding Ares International Corp or give up 7.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leadtek Research vs. Ares International Corp
Performance |
| Timeline |
| Leadtek Research |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ares International Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Leadtek Research and Ares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leadtek Research and Ares International
The main advantage of trading using opposite Leadtek Research and Ares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leadtek Research position performs unexpectedly, Ares International 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 Ares International will offset losses from the drop in Ares International's long position.The idea behind Leadtek Research and Ares International Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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