Correlation Between Lelon Electronics and Kaimei Electronic
Can any of the company-specific risk be diversified away by investing in both Lelon Electronics and Kaimei Electronic 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 Lelon Electronics and Kaimei Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lelon Electronics Corp and Kaimei Electronic Corp, you can compare the effects of market volatilities on Lelon Electronics and Kaimei Electronic 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 Lelon Electronics with a short position of Kaimei Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lelon Electronics and Kaimei Electronic.
Diversification Opportunities for Lelon Electronics and Kaimei Electronic
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lelon and Kaimei is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Lelon Electronics Corp and Kaimei Electronic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaimei Electronic Corp and Lelon Electronics 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 Lelon Electronics Corp are associated (or correlated) with Kaimei Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaimei Electronic Corp has no effect on the direction of Lelon Electronics i.e., Lelon Electronics and Kaimei Electronic go up and down completely randomly.
Pair Corralation between Lelon Electronics and Kaimei Electronic
Assuming the 90 days trading horizon Lelon Electronics Corp is expected to generate 0.72 times more return on investment than Kaimei Electronic. However, Lelon Electronics Corp is 1.39 times less risky than Kaimei Electronic. It trades about 0.22 of its potential returns per unit of risk. Kaimei Electronic Corp is currently generating about 0.15 per unit of risk. If you would invest 7,300 in Lelon Electronics Corp on September 2, 2024 and sell it today you would earn a total of 560.00 from holding Lelon Electronics Corp or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lelon Electronics Corp vs. Kaimei Electronic Corp
Performance |
| Timeline |
| Lelon Electronics Corp |
| Kaimei Electronic Corp |
Lelon Electronics and Kaimei Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lelon Electronics and Kaimei Electronic
The main advantage of trading using opposite Lelon Electronics and Kaimei Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lelon Electronics position performs unexpectedly, Kaimei Electronic 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 Kaimei Electronic will offset losses from the drop in Kaimei Electronic's long position.| Lelon Electronics vs. TA I Technology Co | Lelon Electronics vs. Walsin Technology Corp | Lelon Electronics vs. Greatek Electronics | Lelon Electronics vs. Pan Jit 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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