Correlation Between Pegatron Corp and Lien Hwa
Can any of the company-specific risk be diversified away by investing in both Pegatron Corp and Lien Hwa 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 Pegatron Corp and Lien Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pegatron Corp and Lien Hwa Industrial, you can compare the effects of market volatilities on Pegatron Corp and Lien Hwa 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 Pegatron Corp with a short position of Lien Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pegatron Corp and Lien Hwa.
Diversification Opportunities for Pegatron Corp and Lien Hwa
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pegatron and Lien is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Pegatron Corp and Lien Hwa Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Hwa Industrial and Pegatron 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 Pegatron Corp are associated (or correlated) with Lien Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Hwa Industrial has no effect on the direction of Pegatron Corp i.e., Pegatron Corp and Lien Hwa go up and down completely randomly.
Pair Corralation between Pegatron Corp and Lien Hwa
Assuming the 90 days trading horizon Pegatron Corp is expected to under-perform the Lien Hwa. In addition to that, Pegatron Corp is 1.01 times more volatile than Lien Hwa Industrial. It trades about -0.05 of its total potential returns per unit of risk. Lien Hwa Industrial is currently generating about 0.17 per unit of volatility. If you would invest 5,110 in Lien Hwa Industrial on November 28, 2024 and sell it today you would earn a total of 180.00 from holding Lien Hwa Industrial or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Pegatron Corp vs. Lien Hwa Industrial
Performance |
| Timeline |
| Pegatron Corp |
| Lien Hwa Industrial |
Pegatron Corp and Lien Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pegatron Corp and Lien Hwa
The main advantage of trading using opposite Pegatron Corp and Lien Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pegatron Corp position performs unexpectedly, Lien Hwa 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 Lien Hwa will offset losses from the drop in Lien Hwa's long position.| Pegatron Corp vs. Wistron Corp | Pegatron Corp vs. Quanta Computer | Pegatron Corp vs. Compal Electronics | Pegatron Corp vs. Catcher Technology Co |
| Lien Hwa vs. Great Wall Enterprise | Lien Hwa vs. Lian Hwa Foods | Lien Hwa vs. Charoen Pokphand Enterprise | Lien Hwa vs. Uni President Enterprises Corp |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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