Correlation Between E Lead and AVY Precision
Can any of the company-specific risk be diversified away by investing in both E Lead and AVY 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 AVY 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 AVY Precision Technology, you can compare the effects of market volatilities on E Lead and AVY 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 AVY Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and AVY Precision.
Diversification Opportunities for E Lead and AVY Precision
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2497 and AVY is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and AVY Precision Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVY Precision Technology 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 AVY Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVY Precision Technology has no effect on the direction of E Lead i.e., E Lead and AVY Precision go up and down completely randomly.
Pair Corralation between E Lead and AVY Precision
Assuming the 90 days trading horizon E Lead Electronic Co is expected to generate 0.94 times more return on investment than AVY Precision. However, E Lead Electronic Co is 1.06 times less risky than AVY Precision. It trades about 0.03 of its potential returns per unit of risk. AVY Precision Technology is currently generating about -0.05 per unit of risk. If you would invest 5,820 in E Lead Electronic Co on September 12, 2024 and sell it today you would earn a total of 430.00 from holding E Lead Electronic Co or generate 7.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Lead Electronic Co vs. AVY Precision Technology
Performance |
| Timeline |
| E Lead Electronic |
| AVY Precision Technology |
E Lead and AVY Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and AVY Precision
The main advantage of trading using opposite E Lead and AVY Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, AVY 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 AVY Precision will offset losses from the drop in AVY Precision's long position.| E Lead vs. Feng Tay Enterprises | E Lead vs. Ruentex Development Co | E Lead vs. WiseChip Semiconductor | E Lead vs. Novatek Microelectronics Corp |
| AVY Precision vs. Ability Enterprise Co | AVY Precision vs. XAC Automation | AVY Precision vs. Cheng Fwa Industrial | AVY Precision vs. Kaulin Mfg |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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