Correlation Between E Lead and Actron Technology
Can any of the company-specific risk be diversified away by investing in both E Lead and Actron Technology 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 Actron Technology 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 Actron Technology, you can compare the effects of market volatilities on E Lead and Actron Technology 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 Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Actron Technology.
Diversification Opportunities for E Lead and Actron Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2497 and Actron is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron 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 Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of E Lead i.e., E Lead and Actron Technology go up and down completely randomly.
Pair Corralation between E Lead and Actron Technology
Assuming the 90 days trading horizon E Lead Electronic Co is expected to under-perform the Actron Technology. In addition to that, E Lead is 1.05 times more volatile than Actron Technology. It trades about -0.57 of its total potential returns per unit of risk. Actron Technology is currently generating about -0.14 per unit of volatility. If you would invest 16,750 in Actron Technology on September 13, 2024 and sell it today you would lose (550.00) from holding Actron Technology or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
E Lead Electronic Co vs. Actron Technology
Performance |
| Timeline |
| E Lead Electronic |
| Actron Technology |
E Lead and Actron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Actron Technology
The main advantage of trading using opposite E Lead and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Actron Technology 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 Actron Technology will offset losses from the drop in Actron Technology'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 |
| Actron Technology vs. E Lead Electronic Co | Actron Technology vs. Jentech Precision Industrial | Actron Technology vs. Turvo International Co | Actron Technology vs. Ruentex Development 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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