Correlation Between Leadtek Research and ASRock
Can any of the company-specific risk be diversified away by investing in both Leadtek Research and ASRock 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 ASRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leadtek Research and ASRock Inc, you can compare the effects of market volatilities on Leadtek Research and ASRock 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 ASRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leadtek Research and ASRock.
Diversification Opportunities for Leadtek Research and ASRock
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Leadtek and ASRock is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Leadtek Research and ASRock Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASRock Inc 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 ASRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASRock Inc has no effect on the direction of Leadtek Research i.e., Leadtek Research and ASRock go up and down completely randomly.
Pair Corralation between Leadtek Research and ASRock
Assuming the 90 days trading horizon Leadtek Research is expected to under-perform the ASRock. In addition to that, Leadtek Research is 1.31 times more volatile than ASRock Inc. It trades about -0.21 of its total potential returns per unit of risk. ASRock Inc is currently generating about 0.22 per unit of volatility. If you would invest 20,350 in ASRock Inc on September 1, 2024 and sell it today you would earn a total of 3,250 from holding ASRock Inc or generate 15.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leadtek Research vs. ASRock Inc
Performance |
| Timeline |
| Leadtek Research |
| ASRock Inc |
Leadtek Research and ASRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leadtek Research and ASRock
The main advantage of trading using opposite Leadtek Research and ASRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leadtek Research position performs unexpectedly, ASRock 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 ASRock will offset losses from the drop in ASRock's long position.The idea behind Leadtek Research and ASRock Inc 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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