Correlation Between E Lead and Jentech Precision
Can any of the company-specific risk be diversified away by investing in both E Lead and Jentech Precision 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 Jentech Precision 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 Jentech Precision Industrial, you can compare the effects of market volatilities on E Lead and Jentech Precision 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 Jentech Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Jentech Precision.
Diversification Opportunities for E Lead and Jentech Precision
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between 2497 and Jentech is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Jentech Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jentech Precision 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 Jentech Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jentech Precision has no effect on the direction of E Lead i.e., E Lead and Jentech Precision go up and down completely randomly.
Pair Corralation between E Lead and Jentech Precision
Assuming the 90 days trading horizon E Lead Electronic Co is expected to under-perform the Jentech Precision. But the stock apears to be less risky and, when comparing its historical volatility, E Lead Electronic Co is 1.55 times less risky than Jentech Precision. The stock trades about -0.31 of its potential returns per unit of risk. The Jentech Precision Industrial is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 147,500 in Jentech Precision Industrial on August 31, 2024 and sell it today you would lose (16,500) from holding Jentech Precision Industrial or give up 11.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
E Lead Electronic Co vs. Jentech Precision Industrial
Performance |
| Timeline |
| E Lead Electronic |
| Jentech Precision |
E Lead and Jentech Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Jentech Precision
The main advantage of trading using opposite E Lead and Jentech Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Jentech Precision 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 Jentech Precision will offset losses from the drop in Jentech Precision'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 |
| Jentech Precision vs. United Microelectronics | Jentech Precision vs. Winbond Electronics Corp | Jentech Precision vs. Macronix International Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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