Correlation Between Ma Kuang and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Ma Kuang 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 Ma Kuang and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ma Kuang Healthcare and Ligitek Electronics Co, you can compare the effects of market volatilities on Ma Kuang 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 Ma Kuang with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ma Kuang and Ligitek Electronics.
Diversification Opportunities for Ma Kuang and Ligitek Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 4139 and Ligitek is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Ma Kuang 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 Ma Kuang Healthcare 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 Ma Kuang i.e., Ma Kuang and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Ma Kuang and Ligitek Electronics
Assuming the 90 days trading horizon Ma Kuang is expected to generate 3.56 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, Ma Kuang Healthcare is 2.07 times less risky than Ligitek Electronics. It trades about 0.03 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,220 in Ligitek Electronics Co on October 20, 2024 and sell it today you would earn a total of 140.00 from holding Ligitek Electronics Co or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ma Kuang Healthcare vs. Ligitek Electronics Co
Performance |
| Timeline |
| Ma Kuang Healthcare |
| Ligitek Electronics |
Ma Kuang and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ma Kuang and Ligitek Electronics
The main advantage of trading using opposite Ma Kuang and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang 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.| Ma Kuang vs. Transcend Information | Ma Kuang vs. Mitake Information | Ma Kuang vs. Shinkong Insurance Co | Ma Kuang vs. Information Technology Total |
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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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