Correlation Between Leader Electronics and EirGenix
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and EirGenix 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 EirGenix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and EirGenix, you can compare the effects of market volatilities on Leader Electronics and EirGenix 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 EirGenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and EirGenix.
Diversification Opportunities for Leader Electronics and EirGenix
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leader and EirGenix is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix 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 EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of Leader Electronics i.e., Leader Electronics and EirGenix go up and down completely randomly.
Pair Corralation between Leader Electronics and EirGenix
Assuming the 90 days trading horizon Leader Electronics is expected to generate 0.55 times more return on investment than EirGenix. However, Leader Electronics is 1.83 times less risky than EirGenix. It trades about -0.13 of its potential returns per unit of risk. EirGenix is currently generating about -0.22 per unit of risk. If you would invest 1,720 in Leader Electronics on September 13, 2024 and sell it today you would lose (85.00) from holding Leader Electronics or give up 4.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. EirGenix
Performance |
| Timeline |
| Leader Electronics |
| EirGenix |
Leader Electronics and EirGenix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and EirGenix
The main advantage of trading using opposite Leader Electronics and EirGenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, EirGenix 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 EirGenix will offset losses from the drop in EirGenix'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 |
| EirGenix vs. Gamania Digital Entertainment | EirGenix vs. GameSparcs Co | EirGenix vs. Dadi Early Childhood Education | EirGenix vs. AVerMedia Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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