Correlation Between Lelon Electronics and Nan Pao
Can any of the company-specific risk be diversified away by investing in both Lelon Electronics and Nan Pao 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 Nan Pao 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 Nan Pao Resins, you can compare the effects of market volatilities on Lelon Electronics and Nan Pao 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 Nan Pao. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lelon Electronics and Nan Pao.
Diversification Opportunities for Lelon Electronics and Nan Pao
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lelon and Nan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lelon Electronics Corp and Nan Pao Resins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Pao Resins 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 Nan Pao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Pao Resins has no effect on the direction of Lelon Electronics i.e., Lelon Electronics and Nan Pao go up and down completely randomly.
Pair Corralation between Lelon Electronics and Nan Pao
Assuming the 90 days trading horizon Lelon Electronics is expected to generate 1.51 times less return on investment than Nan Pao. But when comparing it to its historical volatility, Lelon Electronics Corp is 1.27 times less risky than Nan Pao. It trades about 0.07 of its potential returns per unit of risk. Nan Pao Resins is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 17,750 in Nan Pao Resins on September 12, 2024 and sell it today you would earn a total of 14,450 from holding Nan Pao Resins or generate 81.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.71% |
| Values | Daily Returns |
Lelon Electronics Corp vs. Nan Pao Resins
Performance |
| Timeline |
| Lelon Electronics Corp |
| Nan Pao Resins |
Lelon Electronics and Nan Pao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lelon Electronics and Nan Pao
The main advantage of trading using opposite Lelon Electronics and Nan Pao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lelon Electronics position performs unexpectedly, Nan Pao 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 Nan Pao will offset losses from the drop in Nan Pao's long position.| Lelon Electronics vs. AU Optronics | Lelon Electronics vs. Innolux Corp | Lelon Electronics vs. Ruentex Development Co | Lelon Electronics vs. WiseChip Semiconductor |
| Nan Pao vs. Lelon Electronics Corp | Nan Pao vs. Double Bond Chemical | Nan Pao vs. Pan Asia Chemical | Nan Pao vs. C Media Electronics |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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