Correlation Between E Lead and Zeng Hsing
Can any of the company-specific risk be diversified away by investing in both E Lead and Zeng Hsing 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 E Lead and Zeng Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Lead Electronic Co and Zeng Hsing Industrial, you can compare the effects of market volatilities on E Lead and Zeng Hsing 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 E Lead with a short position of Zeng Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Zeng Hsing.
Diversification Opportunities for E Lead and Zeng Hsing
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2497 and Zeng is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Zeng Hsing Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zeng Hsing Industrial and E Lead 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 E Lead Electronic Co are associated (or correlated) with Zeng Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zeng Hsing Industrial has no effect on the direction of E Lead i.e., E Lead and Zeng Hsing go up and down completely randomly.
Pair Corralation between E Lead and Zeng Hsing
Assuming the 90 days trading horizon E Lead Electronic Co is expected to generate 2.19 times more return on investment than Zeng Hsing. However, E Lead is 2.19 times more volatile than Zeng Hsing Industrial. It trades about 0.03 of its potential returns per unit of risk. Zeng Hsing Industrial is currently generating about 0.06 per unit of risk. If you would invest 5,510 in E Lead Electronic Co on October 25, 2024 and sell it today you would earn a total of 320.00 from holding E Lead Electronic Co or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Lead Electronic Co vs. Zeng Hsing Industrial
Performance |
| Timeline |
| E Lead Electronic |
| Zeng Hsing Industrial |
E Lead and Zeng Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Zeng Hsing
The main advantage of trading using opposite E Lead and Zeng Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Zeng Hsing 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 Zeng Hsing will offset losses from the drop in Zeng Hsing's long position.| E Lead vs. Weltrend Semiconductor | E Lead vs. Catcher Technology Co | E Lead vs. Cub Elecparts | E Lead vs. Elan Microelectronics Corp |
| Zeng Hsing vs. TTET Union Corp | Zeng Hsing vs. Shinkong Insurance Co | Zeng Hsing vs. Huaku Development Co | Zeng Hsing vs. China Steel Chemical |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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