Correlation Between Leader Electronics and U Tech
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and U Tech 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 U Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and U Tech Media Corp, you can compare the effects of market volatilities on Leader Electronics and U Tech 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 U Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and U Tech.
Diversification Opportunities for Leader Electronics and U Tech
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leader and 3050 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and U Tech Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Tech Media 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 U Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Tech Media has no effect on the direction of Leader Electronics i.e., Leader Electronics and U Tech go up and down completely randomly.
Pair Corralation between Leader Electronics and U Tech
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the U Tech. But the stock apears to be less risky and, when comparing its historical volatility, Leader Electronics is 1.11 times less risky than U Tech. The stock trades about -0.01 of its potential returns per unit of risk. The U Tech Media Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,550 in U Tech Media Corp on September 12, 2024 and sell it today you would earn a total of 275.00 from holding U Tech Media Corp or generate 17.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. U Tech Media Corp
Performance |
| Timeline |
| Leader Electronics |
| U Tech Media |
Leader Electronics and U Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and U Tech
The main advantage of trading using opposite Leader Electronics and U Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, U Tech 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 U Tech will offset losses from the drop in U Tech'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 |
| U Tech vs. AU Optronics | U Tech vs. Innolux Corp | U Tech vs. Ruentex Development Co | U Tech vs. WiseChip Semiconductor |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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