Correlation Between U Tech and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both U Tech and Leader 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 U Tech and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Tech Media Corp and Leader Electronics, you can compare the effects of market volatilities on U Tech and Leader 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 U Tech with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Tech and Leader Electronics.
Diversification Opportunities for U Tech and Leader Electronics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 3050 and Leader is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding U Tech Media Corp and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and U Tech 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 U Tech Media Corp are associated (or correlated) with Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of U Tech i.e., U Tech and Leader Electronics go up and down completely randomly.
Pair Corralation between U Tech and Leader Electronics
Assuming the 90 days trading horizon U Tech Media Corp is expected to generate 1.11 times more return on investment than Leader Electronics. However, U Tech is 1.11 times more volatile than Leader Electronics. It trades about 0.03 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.01 per unit of risk. If you would invest 1,550 in U Tech Media Corp on September 12, 2024 and sell it today you would earn a total of 275.00 from holding U Tech Media Corp or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Tech Media Corp vs. Leader Electronics
Performance |
| Timeline |
| U Tech Media |
| Leader Electronics |
U Tech and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Tech and Leader Electronics
The main advantage of trading using opposite U Tech and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Tech position performs unexpectedly, Leader 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 Leader Electronics will offset losses from the drop in Leader Electronics' long position.| U Tech vs. AU Optronics | U Tech vs. Innolux Corp | U Tech vs. Ruentex Development Co | U Tech vs. WiseChip Semiconductor |
| Leader Electronics vs. Yang Ming Marine | Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics vs. Taiwan Navigation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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