Correlation Between Chaheng Precision and LandMark Optoelectronics
Can any of the company-specific risk be diversified away by investing in both Chaheng Precision and LandMark Optoelectronics 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 Chaheng Precision and LandMark Optoelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaheng Precision Co and LandMark Optoelectronics, you can compare the effects of market volatilities on Chaheng Precision and LandMark Optoelectronics 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 Chaheng Precision with a short position of LandMark Optoelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaheng Precision and LandMark Optoelectronics.
Diversification Opportunities for Chaheng Precision and LandMark Optoelectronics
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chaheng and LandMark is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Chaheng Precision Co and LandMark Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LandMark Optoelectronics and Chaheng Precision 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 Chaheng Precision Co are associated (or correlated) with LandMark Optoelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LandMark Optoelectronics has no effect on the direction of Chaheng Precision i.e., Chaheng Precision and LandMark Optoelectronics go up and down completely randomly.
Pair Corralation between Chaheng Precision and LandMark Optoelectronics
Assuming the 90 days trading horizon Chaheng Precision Co is expected to under-perform the LandMark Optoelectronics. But the stock apears to be less risky and, when comparing its historical volatility, Chaheng Precision Co is 3.39 times less risky than LandMark Optoelectronics. The stock trades about -0.07 of its potential returns per unit of risk. The LandMark Optoelectronics is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 19,450 in LandMark Optoelectronics on September 3, 2024 and sell it today you would earn a total of 14,850 from holding LandMark Optoelectronics or generate 76.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chaheng Precision Co vs. LandMark Optoelectronics
Performance |
| Timeline |
| Chaheng Precision |
| LandMark Optoelectronics |
Chaheng Precision and LandMark Optoelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaheng Precision and LandMark Optoelectronics
The main advantage of trading using opposite Chaheng Precision and LandMark Optoelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaheng Precision position performs unexpectedly, LandMark Optoelectronics 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 LandMark Optoelectronics will offset losses from the drop in LandMark Optoelectronics' long position.| Chaheng Precision vs. Grand Pacific Petrochemical | Chaheng Precision vs. General Plastic Industrial | Chaheng Precision vs. Ruentex Materials Co | Chaheng Precision vs. Victory New Materials |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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