Correlation Between Min Aik and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Min Aik and Leader Electronics 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 Min Aik and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Min Aik Technology and Leader Electronics, you can compare the effects of market volatilities on Min Aik and Leader Electronics 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 Min Aik with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Leader Electronics.
Diversification Opportunities for Min Aik and Leader Electronics
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Min and Leader is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Min Aik 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 Min Aik Technology are associated (or correlated) with Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of Min Aik i.e., Min Aik and Leader Electronics go up and down completely randomly.
Pair Corralation between Min Aik and Leader Electronics
Assuming the 90 days trading horizon Min Aik Technology is expected to under-perform the Leader Electronics. In addition to that, Min Aik is 1.42 times more volatile than Leader Electronics. It trades about -0.29 of its total potential returns per unit of risk. Leader Electronics is currently generating about -0.24 per unit of volatility. If you would invest 1,800 in Leader Electronics on September 2, 2024 and sell it today you would lose (170.00) from holding Leader Electronics or give up 9.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Min Aik Technology vs. Leader Electronics
Performance |
| Timeline |
| Min Aik Technology |
| Leader Electronics |
Min Aik and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Min Aik and Leader Electronics
The main advantage of trading using opposite Min Aik and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Min Aik position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' long position.The idea behind Min Aik Technology and Leader Electronics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Leader Electronics vs. BES Engineering Co | Leader Electronics vs. Continental Holdings Corp | Leader Electronics vs. Kee Tai Properties | Leader Electronics vs. Hung Sheng Construction |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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