Correlation Between Ares International and Leadtek Research
Can any of the company-specific risk be diversified away by investing in both Ares International 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 Ares International and Leadtek Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ares International Corp and Leadtek Research, you can compare the effects of market volatilities on Ares International 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 Ares International with a short position of Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ares International and Leadtek Research.
Diversification Opportunities for Ares International and Leadtek Research
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ares and Leadtek is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ares International Corp and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research and Ares International 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 Ares International Corp 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 Ares International i.e., Ares International and Leadtek Research go up and down completely randomly.
Pair Corralation between Ares International and Leadtek Research
Assuming the 90 days trading horizon Ares International Corp is expected to under-perform the Leadtek Research. But the stock apears to be less risky and, when comparing its historical volatility, Ares International Corp is 1.05 times less risky than Leadtek Research. The stock trades about -0.23 of its potential returns per unit of risk. The Leadtek Research is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 7,140 in Leadtek Research on October 26, 2024 and sell it today you would lose (280.00) from holding Leadtek Research or give up 3.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ares International Corp vs. Leadtek Research
Performance |
| Timeline |
| Ares International Corp |
| Leadtek Research |
Ares International and Leadtek Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ares International and Leadtek Research
The main advantage of trading using opposite Ares International and Leadtek Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ares International 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.| Ares International vs. Syscom Computer Engineering | Ares International vs. Stark Technology | Ares International vs. Audix Corp | Ares International vs. Fortune Information Systems |
| Leadtek Research vs. Elitegroup Computer Systems | Leadtek Research vs. Gigabyte Technology Co | Leadtek Research vs. Micro Star International Co | Leadtek Research vs. Biostar Microtech 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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