Correlation Between Leader Electronics and C Media
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and C Media 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 C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and C Media Electronics, you can compare the effects of market volatilities on Leader Electronics and C Media 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 C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and C Media.
Diversification Opportunities for Leader Electronics and C Media
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Leader and 6237 is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics 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 C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Leader Electronics i.e., Leader Electronics and C Media go up and down completely randomly.
Pair Corralation between Leader Electronics and C Media
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the C Media. In addition to that, Leader Electronics is 1.01 times more volatile than C Media Electronics. It trades about -0.15 of its total potential returns per unit of risk. C Media Electronics is currently generating about -0.07 per unit of volatility. If you would invest 4,980 in C Media Electronics on August 30, 2024 and sell it today you would lose (140.00) from holding C Media Electronics or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. C Media Electronics
Performance |
| Timeline |
| Leader Electronics |
| C Media Electronics |
Leader Electronics and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and C Media
The main advantage of trading using opposite Leader Electronics and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.| Leader Electronics vs. Yulon Motor Co | Leader Electronics vs. Far Eastern Department | Leader Electronics vs. China Steel Corp | Leader Electronics vs. Chang Hwa Commercial |
| C Media vs. Taiwan Semiconductor Manufacturing | C Media vs. MediaTek | C Media vs. United Microelectronics | C Media vs. Novatek Microelectronics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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