Correlation Between LARGAN Precision and HUA YU
Can any of the company-specific risk be diversified away by investing in both LARGAN Precision and HUA YU 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 LARGAN Precision and HUA YU into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LARGAN Precision Co and HUA YU LIEN, you can compare the effects of market volatilities on LARGAN Precision and HUA YU 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 LARGAN Precision with a short position of HUA YU. Check out your portfolio center. Please also check ongoing floating volatility patterns of LARGAN Precision and HUA YU.
Diversification Opportunities for LARGAN Precision and HUA YU
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LARGAN and HUA is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN and LARGAN Precision 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 LARGAN Precision Co are associated (or correlated) with HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of LARGAN Precision i.e., LARGAN Precision and HUA YU go up and down completely randomly.
Pair Corralation between LARGAN Precision and HUA YU
Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 1.03 times more return on investment than HUA YU. However, LARGAN Precision is 1.03 times more volatile than HUA YU LIEN. It trades about 0.16 of its potential returns per unit of risk. HUA YU LIEN is currently generating about -0.14 per unit of risk. If you would invest 234,000 in LARGAN Precision Co on September 5, 2024 and sell it today you would earn a total of 16,500 from holding LARGAN Precision Co or generate 7.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
LARGAN Precision Co vs. HUA YU LIEN
Performance |
| Timeline |
| LARGAN Precision |
| HUA YU LIEN |
LARGAN Precision and HUA YU Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LARGAN Precision and HUA YU
The main advantage of trading using opposite LARGAN Precision and HUA YU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision position performs unexpectedly, HUA YU 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 HUA YU will offset losses from the drop in HUA YU's long position.| LARGAN Precision vs. MediaTek | LARGAN Precision vs. Hon Hai Precision | LARGAN Precision vs. Delta Electronics | LARGAN Precision vs. Catcher Technology Co |
| HUA YU vs. Advancetek Enterprise Co | HUA YU vs. GTM Holdings Corp | HUA YU vs. De Licacy Industrial | HUA YU vs. Shinkong Textile 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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