Correlation Between Leofoo Development and Wanhwa Enterprise
Can any of the company-specific risk be diversified away by investing in both Leofoo Development and Wanhwa Enterprise 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 Leofoo Development and Wanhwa Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leofoo Development Co and Wanhwa Enterprise Co, you can compare the effects of market volatilities on Leofoo Development and Wanhwa Enterprise 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 Leofoo Development with a short position of Wanhwa Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leofoo Development and Wanhwa Enterprise.
Diversification Opportunities for Leofoo Development and Wanhwa Enterprise
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leofoo and Wanhwa is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Leofoo Development Co and Wanhwa Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wanhwa Enterprise and Leofoo Development 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 Leofoo Development Co are associated (or correlated) with Wanhwa Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wanhwa Enterprise has no effect on the direction of Leofoo Development i.e., Leofoo Development and Wanhwa Enterprise go up and down completely randomly.
Pair Corralation between Leofoo Development and Wanhwa Enterprise
Assuming the 90 days trading horizon Leofoo Development Co is expected to generate 3.11 times more return on investment than Wanhwa Enterprise. However, Leofoo Development is 3.11 times more volatile than Wanhwa Enterprise Co. It trades about 0.13 of its potential returns per unit of risk. Wanhwa Enterprise Co is currently generating about 0.0 per unit of risk. If you would invest 1,770 in Leofoo Development Co on October 25, 2024 and sell it today you would earn a total of 80.00 from holding Leofoo Development Co or generate 4.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leofoo Development Co vs. Wanhwa Enterprise Co
Performance |
| Timeline |
| Leofoo Development |
| Wanhwa Enterprise |
Leofoo Development and Wanhwa Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leofoo Development and Wanhwa Enterprise
The main advantage of trading using opposite Leofoo Development and Wanhwa Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leofoo Development position performs unexpectedly, Wanhwa Enterprise 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 Wanhwa Enterprise will offset losses from the drop in Wanhwa Enterprise's long position.| Leofoo Development vs. First Hotel Co | Leofoo Development vs. Hotel Holiday Garden | Leofoo Development vs. Taiwan Tea Corp | Leofoo Development vs. Far Eastern Department |
| Wanhwa Enterprise vs. First Hotel Co | Wanhwa Enterprise vs. Ambassador Hotel | Wanhwa Enterprise vs. Formosa International Hotels | Wanhwa Enterprise vs. Leofoo 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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