Correlation Between Innolux Corp and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Innolux Corp 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 Innolux Corp and Leader Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Leader Electronics, you can compare the effects of market volatilities on Innolux Corp 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 Innolux Corp with a short position of Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Leader Electronics.
Diversification Opportunities for Innolux Corp and Leader Electronics
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Innolux and Leader is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Innolux Corp 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 Innolux Corp 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 Innolux Corp i.e., Innolux Corp and Leader Electronics go up and down completely randomly.
Pair Corralation between Innolux Corp and Leader Electronics
Assuming the 90 days trading horizon Innolux Corp is expected to generate 1.0 times more return on investment than Leader Electronics. However, Innolux Corp is 1.0 times more volatile than Leader Electronics. It trades about 0.04 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.02 per unit of risk. If you would invest 1,270 in Innolux Corp on September 14, 2024 and sell it today you would earn a total of 265.00 from holding Innolux Corp or generate 20.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Leader Electronics
Performance |
| Timeline |
| Innolux Corp |
| Leader Electronics |
Innolux Corp and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Leader Electronics
The main advantage of trading using opposite Innolux Corp and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp 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.| Innolux Corp vs. AU Optronics | Innolux Corp vs. China Steel Corp | Innolux Corp vs. Hon Hai Precision | Innolux Corp vs. Delta Electronics |
| Leader Electronics vs. Yang Ming Marine | Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics vs. Taiwan Navigation 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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