Correlation Between Leader Electronics and Edom Technology
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Edom Technology 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 Edom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Edom Technology Co, you can compare the effects of market volatilities on Leader Electronics and Edom Technology 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 Edom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Edom Technology.
Diversification Opportunities for Leader Electronics and Edom Technology
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leader and Edom is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Edom Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edom Technology 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 Edom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edom Technology has no effect on the direction of Leader Electronics i.e., Leader Electronics and Edom Technology go up and down completely randomly.
Pair Corralation between Leader Electronics and Edom Technology
Assuming the 90 days trading horizon Leader Electronics is expected to generate 1.27 times more return on investment than Edom Technology. However, Leader Electronics is 1.27 times more volatile than Edom Technology Co. It trades about 0.05 of its potential returns per unit of risk. Edom Technology Co is currently generating about 0.02 per unit of risk. If you would invest 1,000.00 in Leader Electronics on September 12, 2024 and sell it today you would earn a total of 650.00 from holding Leader Electronics or generate 65.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Edom Technology Co
Performance |
| Timeline |
| Leader Electronics |
| Edom Technology |
Leader Electronics and Edom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Edom Technology
The main advantage of trading using opposite Leader Electronics and Edom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Edom Technology 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 Edom Technology will offset losses from the drop in Edom Technology'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 |
| Edom Technology vs. Altek Corp | Edom Technology vs. ALi Corp | Edom Technology vs. Leader Electronics | Edom Technology vs. Spirox 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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