Correlation Between Leader Electronics and Shan Loong
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Shan Loong 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 Shan Loong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Shan Loong Transportation Co, you can compare the effects of market volatilities on Leader Electronics and Shan Loong 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 Shan Loong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Shan Loong.
Diversification Opportunities for Leader Electronics and Shan Loong
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leader and Shan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Shan Loong Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shan Loong Transport 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 Shan Loong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shan Loong Transport has no effect on the direction of Leader Electronics i.e., Leader Electronics and Shan Loong go up and down completely randomly.
Pair Corralation between Leader Electronics and Shan Loong
Assuming the 90 days trading horizon Leader Electronics is expected to generate 2.39 times more return on investment than Shan Loong. However, Leader Electronics is 2.39 times more volatile than Shan Loong Transportation Co. It trades about -0.09 of its potential returns per unit of risk. Shan Loong Transportation Co is currently generating about -0.28 per unit of risk. If you would invest 1,605 in Leader Electronics on October 14, 2024 and sell it today you would lose (105.00) from holding Leader Electronics or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Shan Loong Transportation Co
Performance |
| Timeline |
| Leader Electronics |
| Shan Loong Transport |
Leader Electronics and Shan Loong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Shan Loong
The main advantage of trading using opposite Leader Electronics and Shan Loong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Shan Loong 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 Shan Loong will offset losses from the drop in Shan Loong's long position.| Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
| Shan Loong vs. Ruentex Development Co | Shan Loong vs. WiseChip Semiconductor | Shan Loong vs. Leader Electronics | Shan Loong 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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