Correlation Between Primax Electronics and Longwell
Can any of the company-specific risk be diversified away by investing in both Primax Electronics and Longwell 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 Primax Electronics and Longwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Primax Electronics and Longwell Co, you can compare the effects of market volatilities on Primax Electronics and Longwell 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 Primax Electronics with a short position of Longwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Primax Electronics and Longwell.
Diversification Opportunities for Primax Electronics and Longwell
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Primax and Longwell is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Primax Electronics and Longwell Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longwell and Primax Electronics 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 Primax Electronics are associated (or correlated) with Longwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longwell has no effect on the direction of Primax Electronics i.e., Primax Electronics and Longwell go up and down completely randomly.
Pair Corralation between Primax Electronics and Longwell
Assuming the 90 days trading horizon Primax Electronics is expected to generate 0.94 times more return on investment than Longwell. However, Primax Electronics is 1.07 times less risky than Longwell. It trades about 0.15 of its potential returns per unit of risk. Longwell Co is currently generating about -0.17 per unit of risk. If you would invest 7,880 in Primax Electronics on September 4, 2024 and sell it today you would earn a total of 460.00 from holding Primax Electronics or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Primax Electronics vs. Longwell Co
Performance |
| Timeline |
| Primax Electronics |
| Longwell |
Primax Electronics and Longwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Primax Electronics and Longwell
The main advantage of trading using opposite Primax Electronics and Longwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Primax Electronics position performs unexpectedly, Longwell 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 Longwell will offset losses from the drop in Longwell's long position.| Primax Electronics vs. Taiwan Semiconductor Manufacturing | Primax Electronics vs. Yang Ming Marine | Primax Electronics vs. ASE Industrial Holding | Primax Electronics vs. AU Optronics |
| Longwell vs. Acbel Polytech | Longwell vs. Primax Electronics | Longwell vs. Flexium Interconnect | Longwell vs. Career Technology MFG |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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