Correlation Between Lelon Electronics and Wafer Works
Can any of the company-specific risk be diversified away by investing in both Lelon Electronics and Wafer Works 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 Wafer Works 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 Wafer Works, you can compare the effects of market volatilities on Lelon Electronics and Wafer Works 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 Wafer Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lelon Electronics and Wafer Works.
Diversification Opportunities for Lelon Electronics and Wafer Works
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lelon and Wafer is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lelon Electronics Corp and Wafer Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wafer Works 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 Wafer Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wafer Works has no effect on the direction of Lelon Electronics i.e., Lelon Electronics and Wafer Works go up and down completely randomly.
Pair Corralation between Lelon Electronics and Wafer Works
Assuming the 90 days trading horizon Lelon Electronics Corp is expected to generate 0.73 times more return on investment than Wafer Works. However, Lelon Electronics Corp is 1.37 times less risky than Wafer Works. It trades about 0.09 of its potential returns per unit of risk. Wafer Works is currently generating about 0.02 per unit of risk. If you would invest 7,440 in Lelon Electronics Corp on August 30, 2024 and sell it today you would earn a total of 230.00 from holding Lelon Electronics Corp or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lelon Electronics Corp vs. Wafer Works
Performance |
| Timeline |
| Lelon Electronics Corp |
| Wafer Works |
Lelon Electronics and Wafer Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lelon Electronics and Wafer Works
The main advantage of trading using opposite Lelon Electronics and Wafer Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lelon Electronics position performs unexpectedly, Wafer Works 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 Wafer Works will offset losses from the drop in Wafer Works' 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 |
| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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