Correlation Between New Advanced and Li Peng
Can any of the company-specific risk be diversified away by investing in both New Advanced and Li Peng 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 New Advanced and Li Peng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Advanced Electronics and Li Peng Enterprise, you can compare the effects of market volatilities on New Advanced and Li Peng 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 New Advanced with a short position of Li Peng. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Advanced and Li Peng.
Diversification Opportunities for New Advanced and Li Peng
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and 1447 is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding New Advanced Electronics and Li Peng Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Peng Enterprise and New Advanced 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 New Advanced Electronics are associated (or correlated) with Li Peng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Peng Enterprise has no effect on the direction of New Advanced i.e., New Advanced and Li Peng go up and down completely randomly.
Pair Corralation between New Advanced and Li Peng
Assuming the 90 days trading horizon New Advanced Electronics is expected to under-perform the Li Peng. In addition to that, New Advanced is 1.35 times more volatile than Li Peng Enterprise. It trades about -0.21 of its total potential returns per unit of risk. Li Peng Enterprise is currently generating about -0.08 per unit of volatility. If you would invest 810.00 in Li Peng Enterprise on August 28, 2024 and sell it today you would lose (26.00) from holding Li Peng Enterprise or give up 3.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Advanced Electronics vs. Li Peng Enterprise
Performance |
| Timeline |
| New Advanced Electronics |
| Li Peng Enterprise |
New Advanced and Li Peng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Advanced and Li Peng
The main advantage of trading using opposite New Advanced and Li Peng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Advanced position performs unexpectedly, Li Peng 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 Li Peng will offset losses from the drop in Li Peng's long position.| New Advanced vs. Advantech Co | New Advanced vs. IEI Integration Corp | New Advanced vs. Flytech Technology Co | New Advanced vs. ADLINK Technology |
| Li Peng vs. Taiwan Semiconductor Manufacturing | Li Peng vs. Hon Hai Precision | Li Peng vs. MediaTek | Li Peng vs. Chunghwa Telecom Co |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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