Correlation Between Powertech Industrial and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Powertech Industrial 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 Powertech Industrial and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Powertech Industrial Co and Leader Electronics, you can compare the effects of market volatilities on Powertech Industrial 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 Powertech Industrial with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Powertech Industrial and Leader Electronics.
Diversification Opportunities for Powertech Industrial and Leader Electronics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Powertech and Leader is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Powertech Industrial Co and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Powertech Industrial 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 Powertech Industrial 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 Powertech Industrial i.e., Powertech Industrial and Leader Electronics go up and down completely randomly.
Pair Corralation between Powertech Industrial and Leader Electronics
Assuming the 90 days trading horizon Powertech Industrial Co is expected to under-perform the Leader Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Powertech Industrial Co is 1.01 times less risky than Leader Electronics. The stock trades about -0.33 of its potential returns per unit of risk. The Leader Electronics is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,520 in Leader Electronics on October 24, 2024 and sell it today you would lose (75.00) from holding Leader Electronics or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Powertech Industrial Co vs. Leader Electronics
Performance |
| Timeline |
| Powertech Industrial |
| Leader Electronics |
Powertech Industrial and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Powertech Industrial and Leader Electronics
The main advantage of trading using opposite Powertech Industrial and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Powertech Industrial 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.| Powertech Industrial vs. Leader Electronics | Powertech Industrial vs. Darwin Precisions Corp | Powertech Industrial vs. Silitech Technology Corp | Powertech Industrial vs. Altek Corp |
| Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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