Correlation Between Innolux Corp and Ledtech Electronics
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Ledtech 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 Ledtech 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 Ledtech Electronics Corp, you can compare the effects of market volatilities on Innolux Corp and Ledtech 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 Ledtech Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Ledtech Electronics.
Diversification Opportunities for Innolux Corp and Ledtech Electronics
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Innolux and Ledtech is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Ledtech Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ledtech Electronics Corp 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 Ledtech Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ledtech Electronics Corp has no effect on the direction of Innolux Corp i.e., Innolux Corp and Ledtech Electronics go up and down completely randomly.
Pair Corralation between Innolux Corp and Ledtech Electronics
Assuming the 90 days trading horizon Innolux Corp is expected to generate 0.63 times more return on investment than Ledtech Electronics. However, Innolux Corp is 1.59 times less risky than Ledtech Electronics. It trades about -0.05 of its potential returns per unit of risk. Ledtech Electronics Corp is currently generating about -0.12 per unit of risk. If you would invest 1,585 in Innolux Corp on September 12, 2024 and sell it today you would lose (30.00) from holding Innolux Corp or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Ledtech Electronics Corp
Performance |
| Timeline |
| Innolux Corp |
| Ledtech Electronics Corp |
Innolux Corp and Ledtech Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Ledtech Electronics
The main advantage of trading using opposite Innolux Corp and Ledtech Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Ledtech 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 Ledtech Electronics will offset losses from the drop in Ledtech Electronics' long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. Ruentex Development Co | Innolux Corp vs. WiseChip Semiconductor | Innolux Corp vs. Novatek Microelectronics Corp |
| Ledtech Electronics vs. AU Optronics | Ledtech Electronics vs. Innolux Corp | Ledtech Electronics vs. Ruentex Development Co | Ledtech Electronics vs. WiseChip Semiconductor |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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