Correlation Between Leader Electronics and Nien Hsing
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Nien Hsing 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 Nien Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Nien Hsing Textile, you can compare the effects of market volatilities on Leader Electronics and Nien Hsing 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 Nien Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Nien Hsing.
Diversification Opportunities for Leader Electronics and Nien Hsing
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leader and Nien is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Nien Hsing Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Hsing Textile 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 Nien Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Hsing Textile has no effect on the direction of Leader Electronics i.e., Leader Electronics and Nien Hsing go up and down completely randomly.
Pair Corralation between Leader Electronics and Nien Hsing
Assuming the 90 days trading horizon Leader Electronics is expected to generate 3.22 times more return on investment than Nien Hsing. However, Leader Electronics is 3.22 times more volatile than Nien Hsing Textile. It trades about 0.04 of its potential returns per unit of risk. Nien Hsing Textile is currently generating about -0.01 per unit of risk. If you would invest 980.00 in Leader Electronics on October 13, 2024 and sell it today you would earn a total of 520.00 from holding Leader Electronics or generate 53.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Leader Electronics vs. Nien Hsing Textile
Performance |
| Timeline |
| Leader Electronics |
| Nien Hsing Textile |
Leader Electronics and Nien Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Nien Hsing
The main advantage of trading using opposite Leader Electronics and Nien Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Nien Hsing 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 Nien Hsing will offset losses from the drop in Nien Hsing's long position.| Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
| Nien Hsing vs. Ruentex Development Co | Nien Hsing vs. WiseChip Semiconductor | Nien Hsing vs. Leader Electronics | Nien Hsing vs. CTCI 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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