Correlation Between Leader Electronics and Gemtek Technology
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Gemtek 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 Gemtek 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 Gemtek Technology Co, you can compare the effects of market volatilities on Leader Electronics and Gemtek 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 Gemtek Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Gemtek Technology.
Diversification Opportunities for Leader Electronics and Gemtek Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leader and Gemtek is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek 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 Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of Leader Electronics i.e., Leader Electronics and Gemtek Technology go up and down completely randomly.
Pair Corralation between Leader Electronics and Gemtek Technology
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Gemtek Technology. In addition to that, Leader Electronics is 1.16 times more volatile than Gemtek Technology Co. It trades about -0.01 of its total potential returns per unit of risk. Gemtek Technology Co is currently generating about 0.01 per unit of volatility. If you would invest 3,450 in Gemtek Technology Co on September 12, 2024 and sell it today you would earn a total of 35.00 from holding Gemtek Technology Co or generate 1.01% 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. Gemtek Technology Co
Performance |
| Timeline |
| Leader Electronics |
| Gemtek Technology |
Leader Electronics and Gemtek Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Gemtek Technology
The main advantage of trading using opposite Leader Electronics and Gemtek Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Gemtek 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 Gemtek Technology will offset losses from the drop in Gemtek 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 |
| Gemtek Technology vs. AU Optronics | Gemtek Technology vs. Innolux Corp | Gemtek Technology vs. Ruentex Development Co | Gemtek Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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