Correlation Between Leader Electronics and Pacific Hospital
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Pacific Hospital 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 Pacific Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Pacific Hospital Supply, you can compare the effects of market volatilities on Leader Electronics and Pacific Hospital 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 Pacific Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Pacific Hospital.
Diversification Opportunities for Leader Electronics and Pacific Hospital
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leader and Pacific is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Pacific Hospital Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Hospital Supply 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 Pacific Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Hospital Supply has no effect on the direction of Leader Electronics i.e., Leader Electronics and Pacific Hospital go up and down completely randomly.
Pair Corralation between Leader Electronics and Pacific Hospital
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Pacific Hospital. In addition to that, Leader Electronics is 3.58 times more volatile than Pacific Hospital Supply. It trades about -0.01 of its total potential returns per unit of risk. Pacific Hospital Supply is currently generating about 0.08 per unit of volatility. If you would invest 7,541 in Pacific Hospital Supply on September 12, 2024 and sell it today you would earn a total of 1,529 from holding Pacific Hospital Supply or generate 20.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Pacific Hospital Supply
Performance |
| Timeline |
| Leader Electronics |
| Pacific Hospital Supply |
Leader Electronics and Pacific Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Pacific Hospital
The main advantage of trading using opposite Leader Electronics and Pacific Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Pacific Hospital 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 Pacific Hospital will offset losses from the drop in Pacific Hospital'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 |
| Pacific Hospital vs. Universal Vision Biotechnology | Pacific Hospital vs. Excelsior Medical Co | Pacific Hospital vs. Ruentex Development Co | Pacific Hospital vs. Symtek Automation Asia |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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