Correlation Between Leader Electronics and Lealea Enterprise
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Lealea Enterprise 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 Lealea Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Lealea Enterprise Co, you can compare the effects of market volatilities on Leader Electronics and Lealea Enterprise 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 Lealea Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Lealea Enterprise.
Diversification Opportunities for Leader Electronics and Lealea Enterprise
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leader and Lealea is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Lealea Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lealea Enterprise 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 Lealea Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lealea Enterprise has no effect on the direction of Leader Electronics i.e., Leader Electronics and Lealea Enterprise go up and down completely randomly.
Pair Corralation between Leader Electronics and Lealea Enterprise
Assuming the 90 days trading horizon Leader Electronics is expected to generate 2.17 times more return on investment than Lealea Enterprise. However, Leader Electronics is 2.17 times more volatile than Lealea Enterprise Co. It trades about -0.01 of its potential returns per unit of risk. Lealea Enterprise Co is currently generating about -0.03 per unit of risk. If you would invest 2,055 in Leader Electronics on September 12, 2024 and sell it today you would lose (405.00) from holding Leader Electronics or give up 19.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Lealea Enterprise Co
Performance |
| Timeline |
| Leader Electronics |
| Lealea Enterprise |
Leader Electronics and Lealea Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Lealea Enterprise
The main advantage of trading using opposite Leader Electronics and Lealea Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Lealea Enterprise 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 Lealea Enterprise will offset losses from the drop in Lealea Enterprise'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 |
| Lealea Enterprise vs. Feng Tay Enterprises | Lealea Enterprise vs. Ruentex Development Co | Lealea Enterprise vs. WiseChip Semiconductor | Lealea Enterprise vs. Novatek Microelectronics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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