Correlation Between Leader Electronics and Golden Friends
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Golden Friends 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 Golden Friends into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Golden Friends, you can compare the effects of market volatilities on Leader Electronics and Golden Friends 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 Golden Friends. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Golden Friends.
Diversification Opportunities for Leader Electronics and Golden Friends
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Leader and Golden is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Golden Friends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Friends 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 Golden Friends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Friends has no effect on the direction of Leader Electronics i.e., Leader Electronics and Golden Friends go up and down completely randomly.
Pair Corralation between Leader Electronics and Golden Friends
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Golden Friends. In addition to that, Leader Electronics is 1.71 times more volatile than Golden Friends. It trades about -0.03 of its total potential returns per unit of risk. Golden Friends is currently generating about 0.08 per unit of volatility. If you would invest 7,950 in Golden Friends on September 4, 2024 and sell it today you would earn a total of 2,200 from holding Golden Friends or generate 27.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Golden Friends
Performance |
| Timeline |
| Leader Electronics |
| Golden Friends |
Leader Electronics and Golden Friends Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Golden Friends
The main advantage of trading using opposite Leader Electronics and Golden Friends positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Golden Friends 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 Golden Friends will offset losses from the drop in Golden Friends' long position.| Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
| Golden Friends vs. Highlight Tech | Golden Friends vs. WiseChip Semiconductor | Golden Friends vs. Novatek Microelectronics Corp | Golden Friends vs. Leader Electronics |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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