Correlation Between Les Enphants and Collins
Can any of the company-specific risk be diversified away by investing in both Les Enphants and Collins 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 Les Enphants and Collins into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Enphants Co and Collins Co, you can compare the effects of market volatilities on Les Enphants and Collins 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 Les Enphants with a short position of Collins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Enphants and Collins.
Diversification Opportunities for Les Enphants and Collins
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Les and Collins is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Les Enphants Co and Collins Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins and Les Enphants 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 Les Enphants Co are associated (or correlated) with Collins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins has no effect on the direction of Les Enphants i.e., Les Enphants and Collins go up and down completely randomly.
Pair Corralation between Les Enphants and Collins
Assuming the 90 days trading horizon Les Enphants Co is expected to generate 2.21 times more return on investment than Collins. However, Les Enphants is 2.21 times more volatile than Collins Co. It trades about 0.06 of its potential returns per unit of risk. Collins Co is currently generating about -0.07 per unit of risk. If you would invest 711.00 in Les Enphants Co on September 3, 2024 and sell it today you would earn a total of 155.00 from holding Les Enphants Co or generate 21.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Les Enphants Co vs. Collins Co
Performance |
| Timeline |
| Les Enphants |
| Collins |
Les Enphants and Collins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Enphants and Collins
The main advantage of trading using opposite Les Enphants and Collins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Enphants position performs unexpectedly, Collins 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 Collins will offset losses from the drop in Collins' long position.| Les Enphants vs. Far Eastern Department | Les Enphants vs. Shin Shin Co | Les Enphants vs. First Hotel Co | Les Enphants vs. Hung Sheng Construction |
| Collins vs. Taiwan Tea Corp | Collins vs. Far Eastern Department | Collins vs. First Hotel Co | Collins vs. Les Enphants 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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