Correlation Between Newretail and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Newretail 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 Newretail and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Leader Electronics, you can compare the effects of market volatilities on Newretail 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 Newretail with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Leader Electronics.
Diversification Opportunities for Newretail and Leader Electronics
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Newretail and Leader is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Newretail 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 Newretail Co 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 Newretail i.e., Newretail and Leader Electronics go up and down completely randomly.
Pair Corralation between Newretail and Leader Electronics
Assuming the 90 days trading horizon Newretail Co is expected to generate 2.87 times more return on investment than Leader Electronics. However, Newretail is 2.87 times more volatile than Leader Electronics. It trades about 0.27 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.15 per unit of risk. If you would invest 2,010 in Newretail Co on August 30, 2024 and sell it today you would earn a total of 585.00 from holding Newretail Co or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Newretail Co vs. Leader Electronics
Performance |
| Timeline |
| Newretail |
| Leader Electronics |
Newretail and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Leader Electronics
The main advantage of trading using opposite Newretail and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail 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.| Newretail vs. Simple Mart Retail | Newretail vs. Johnson Health Tech | Newretail vs. Pacific Construction Co | Newretail vs. Kindom Construction Corp |
| Leader Electronics vs. Yulon Motor Co | Leader Electronics vs. Far Eastern Department | Leader Electronics vs. China Steel Corp | Leader Electronics vs. Chang Hwa Commercial |
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.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |