Correlation Between Leader Electronics and Uni President
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Uni President 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 Leader Electronics and Uni President into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Uni President Enterprises Corp, you can compare the effects of market volatilities on Leader Electronics and Uni President 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 Leader Electronics with a short position of Uni President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Uni President.
Diversification Opportunities for Leader Electronics and Uni President
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leader and Uni is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and Leader Electronics 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 Leader Electronics are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of Leader Electronics i.e., Leader Electronics and Uni President go up and down completely randomly.
Pair Corralation between Leader Electronics and Uni President
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Uni President. In addition to that, Leader Electronics is 1.45 times more volatile than Uni President Enterprises Corp. It trades about -0.14 of its total potential returns per unit of risk. Uni President Enterprises Corp is currently generating about -0.07 per unit of volatility. If you would invest 8,600 in Uni President Enterprises Corp on September 13, 2024 and sell it today you would lose (170.00) from holding Uni President Enterprises Corp or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Uni President Enterprises Corp
Performance |
| Timeline |
| Leader Electronics |
| Uni President Enterp |
Leader Electronics and Uni President Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Uni President
The main advantage of trading using opposite Leader Electronics and Uni President positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Uni President 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 Uni President will offset losses from the drop in Uni President's long position.| 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 |
| Uni President vs. President Chain Store | Uni President vs. Formosa Plastics Corp | Uni President vs. Nan Ya Plastics | Uni President vs. Taiwan Cement Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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