Correlation Between Leader Electronics and AMPACS Corp
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and AMPACS Corp 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 AMPACS Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and AMPACS Corp, you can compare the effects of market volatilities on Leader Electronics and AMPACS Corp 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 AMPACS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and AMPACS Corp.
Diversification Opportunities for Leader Electronics and AMPACS Corp
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leader and AMPACS is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and AMPACS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMPACS Corp 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 AMPACS Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMPACS Corp has no effect on the direction of Leader Electronics i.e., Leader Electronics and AMPACS Corp go up and down completely randomly.
Pair Corralation between Leader Electronics and AMPACS Corp
Assuming the 90 days trading horizon Leader Electronics is expected to generate 0.78 times more return on investment than AMPACS Corp. However, Leader Electronics is 1.28 times less risky than AMPACS Corp. It trades about -0.11 of its potential returns per unit of risk. AMPACS Corp is currently generating about -0.24 per unit of risk. If you would invest 1,865 in Leader Electronics on September 12, 2024 and sell it today you would lose (230.00) from holding Leader Electronics or give up 12.33% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Leader Electronics vs. AMPACS Corp
Performance |
Timeline |
Leader Electronics |
AMPACS Corp |
Leader Electronics and AMPACS Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leader Electronics and AMPACS Corp
The main advantage of trading using opposite Leader Electronics and AMPACS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, AMPACS Corp 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 AMPACS Corp will offset losses from the drop in AMPACS Corp'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 |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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