Correlation Between Taisol Electronics and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Taisol Electronics and Ligitek 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 Taisol Electronics and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taisol Electronics Co and Ligitek Electronics Co, you can compare the effects of market volatilities on Taisol Electronics and Ligitek 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 Taisol Electronics with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisol Electronics and Ligitek Electronics.
Diversification Opportunities for Taisol Electronics and Ligitek Electronics
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Taisol and Ligitek is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Taisol Electronics Co and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Taisol 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 Taisol Electronics Co are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Taisol Electronics i.e., Taisol Electronics and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Taisol Electronics and Ligitek Electronics
Assuming the 90 days trading horizon Taisol Electronics is expected to generate 3.07 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, Taisol Electronics Co is 1.15 times less risky than Ligitek Electronics. It trades about 0.04 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,925 in Ligitek Electronics Co on September 2, 2024 and sell it today you would earn a total of 2,020 from holding Ligitek Electronics Co or generate 104.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taisol Electronics Co vs. Ligitek Electronics Co
Performance |
| Timeline |
| Taisol Electronics |
| Ligitek Electronics |
Taisol Electronics and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taisol Electronics and Ligitek Electronics
The main advantage of trading using opposite Taisol Electronics and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taisol Electronics position performs unexpectedly, Ligitek 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Taisol Electronics vs. Hon Hai Precision | Taisol Electronics vs. Delta Electronics | Taisol Electronics vs. LARGAN Precision Co | Taisol Electronics vs. Yageo Corp |
| Ligitek Electronics vs. U Media Communications | Ligitek Electronics vs. ESUN Financial Holding | Ligitek Electronics vs. Data International Co | Ligitek Electronics vs. Otsuka Information Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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