Correlation Between E Lead and Champion Building
Can any of the company-specific risk be diversified away by investing in both E Lead and Champion Building 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 Champion Building 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 Champion Building Materials, you can compare the effects of market volatilities on E Lead and Champion Building 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 Champion Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Champion Building.
Diversification Opportunities for E Lead and Champion Building
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 2497 and Champion is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Champion Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Building 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 Champion Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Building has no effect on the direction of E Lead i.e., E Lead and Champion Building go up and down completely randomly.
Pair Corralation between E Lead and Champion Building
Assuming the 90 days trading horizon E Lead Electronic Co is expected to under-perform the Champion Building. In addition to that, E Lead is 1.0 times more volatile than Champion Building Materials. It trades about -0.01 of its total potential returns per unit of risk. Champion Building Materials is currently generating about 0.02 per unit of volatility. If you would invest 922.00 in Champion Building Materials on August 30, 2024 and sell it today you would earn a total of 103.00 from holding Champion Building Materials or generate 11.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Lead Electronic Co vs. Champion Building Materials
Performance |
| Timeline |
| E Lead Electronic |
| Champion Building |
E Lead and Champion Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Champion Building
The main advantage of trading using opposite E Lead and Champion Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Champion Building 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 Champion Building will offset losses from the drop in Champion Building'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 |
| Champion Building vs. Yulon Motor Co | Champion Building vs. Far Eastern Department | Champion Building vs. China Steel Corp | Champion Building vs. Chang Hwa Commercial |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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