Correlation Between Lotes and Altek Corp
Can any of the company-specific risk be diversified away by investing in both Lotes and Altek Corp 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 Lotes and Altek Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotes Co and Altek Corp, you can compare the effects of market volatilities on Lotes and Altek Corp 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 Lotes with a short position of Altek Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotes and Altek Corp.
Diversification Opportunities for Lotes and Altek Corp
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lotes and Altek is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lotes Co and Altek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altek Corp and Lotes 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 Lotes Co are associated (or correlated) with Altek Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altek Corp has no effect on the direction of Lotes i.e., Lotes and Altek Corp go up and down completely randomly.
Pair Corralation between Lotes and Altek Corp
Assuming the 90 days trading horizon Lotes Co is expected to generate 1.24 times more return on investment than Altek Corp. However, Lotes is 1.24 times more volatile than Altek Corp. It trades about 0.05 of its potential returns per unit of risk. Altek Corp is currently generating about -0.01 per unit of risk. If you would invest 147,500 in Lotes Co on October 12, 2024 and sell it today you would earn a total of 33,500 from holding Lotes Co or generate 22.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotes Co vs. Altek Corp
Performance |
| Timeline |
| Lotes |
| Altek Corp |
Lotes and Altek Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotes and Altek Corp
The main advantage of trading using opposite Lotes and Altek Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotes position performs unexpectedly, Altek Corp 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 Altek Corp will offset losses from the drop in Altek Corp's long position.| Lotes vs. Unimicron Technology Corp | Lotes vs. Alchip Technologies | Lotes vs. Nan Ya Printed | Lotes vs. Global Unichip Corp |
| Altek Corp vs. Ability Enterprise Co | Altek Corp vs. Sunplus Technology Co | Altek Corp vs. ALi Corp | Altek Corp vs. Edom Technology 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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