Correlation Between Simple Mart and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Simple Mart and Ligitek Electronics 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 Simple Mart and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simple Mart Retail and Ligitek Electronics Co, you can compare the effects of market volatilities on Simple Mart and Ligitek Electronics 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 Simple Mart with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simple Mart and Ligitek Electronics.
Diversification Opportunities for Simple Mart and Ligitek Electronics
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Simple and Ligitek is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Simple Mart Retail and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Simple Mart 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 Simple Mart Retail are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Simple Mart i.e., Simple Mart and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Simple Mart and Ligitek Electronics
Assuming the 90 days trading horizon Simple Mart is expected to generate 20.19 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, Simple Mart Retail is 1.97 times less risky than Ligitek Electronics. It trades about 0.01 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,618 in Ligitek Electronics Co on August 26, 2024 and sell it today you would earn a total of 2,082 from holding Ligitek Electronics Co or generate 128.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simple Mart Retail vs. Ligitek Electronics Co
Performance |
| Timeline |
| Simple Mart Retail |
| Ligitek Electronics |
Simple Mart and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simple Mart and Ligitek Electronics
The main advantage of trading using opposite Simple Mart and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simple Mart position performs unexpectedly, Ligitek Electronics 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Simple Mart vs. Taiwan Semiconductor Manufacturing | Simple Mart vs. Hon Hai Precision | Simple Mart vs. MediaTek | Simple Mart vs. Chunghwa Telecom Co |
| Ligitek Electronics vs. Leader Electronics | Ligitek Electronics vs. Simple Mart Retail | Ligitek Electronics vs. Grand Ocean Retail | Ligitek Electronics vs. Amazing Microelectronic |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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