Correlation Between Leader Electronics and Fittech
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Fittech 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 Fittech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Fittech Co, you can compare the effects of market volatilities on Leader Electronics and Fittech 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 Fittech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Fittech.
Diversification Opportunities for Leader Electronics and Fittech
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Leader and Fittech is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Fittech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fittech 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 Fittech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fittech has no effect on the direction of Leader Electronics i.e., Leader Electronics and Fittech go up and down completely randomly.
Pair Corralation between Leader Electronics and Fittech
Assuming the 90 days trading horizon Leader Electronics is expected to generate 0.45 times more return on investment than Fittech. However, Leader Electronics is 2.21 times less risky than Fittech. It trades about -0.17 of its potential returns per unit of risk. Fittech Co is currently generating about -0.18 per unit of risk. If you would invest 1,760 in Leader Electronics on September 4, 2024 and sell it today you would lose (115.00) from holding Leader Electronics or give up 6.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Electronics vs. Fittech Co
Performance |
| Timeline |
| Leader Electronics |
| Fittech |
Leader Electronics and Fittech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Electronics and Fittech
The main advantage of trading using opposite Leader Electronics and Fittech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Fittech 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 Fittech will offset losses from the drop in Fittech's long position.| Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
| Fittech vs. Sitronix Technology Corp | Fittech vs. Taiwan Surface Mounting | Fittech vs. Nan Ya Printed | Fittech vs. Visual Photonics Epitaxy |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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