Correlation Between RichWave Technology and Lungyen Life
Can any of the company-specific risk be diversified away by investing in both RichWave Technology and Lungyen Life 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 RichWave Technology and Lungyen Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RichWave Technology Corp and Lungyen Life Service, you can compare the effects of market volatilities on RichWave Technology and Lungyen Life 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 RichWave Technology with a short position of Lungyen Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of RichWave Technology and Lungyen Life.
Diversification Opportunities for RichWave Technology and Lungyen Life
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between RichWave and Lungyen is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding RichWave Technology Corp and Lungyen Life Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lungyen Life Service and RichWave Technology 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 RichWave Technology Corp are associated (or correlated) with Lungyen Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lungyen Life Service has no effect on the direction of RichWave Technology i.e., RichWave Technology and Lungyen Life go up and down completely randomly.
Pair Corralation between RichWave Technology and Lungyen Life
Assuming the 90 days trading horizon RichWave Technology Corp is expected to under-perform the Lungyen Life. In addition to that, RichWave Technology is 2.77 times more volatile than Lungyen Life Service. It trades about -0.13 of its total potential returns per unit of risk. Lungyen Life Service is currently generating about -0.28 per unit of volatility. If you would invest 5,600 in Lungyen Life Service on October 29, 2024 and sell it today you would lose (300.00) from holding Lungyen Life Service or give up 5.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RichWave Technology Corp vs. Lungyen Life Service
Performance |
| Timeline |
| RichWave Technology Corp |
| Lungyen Life Service |
RichWave Technology and Lungyen Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RichWave Technology and Lungyen Life
The main advantage of trading using opposite RichWave Technology and Lungyen Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RichWave Technology position performs unexpectedly, Lungyen Life 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 Lungyen Life will offset losses from the drop in Lungyen Life's long position.| RichWave Technology vs. Alchip Technologies | RichWave Technology vs. Asmedia Technology | RichWave Technology vs. Novatek Microelectronics Corp | RichWave Technology vs. Global Unichip Corp |
| Lungyen Life vs. Cleanaway Co | Lungyen Life vs. StShine Optical Co | Lungyen Life vs. Formosa International Hotels | Lungyen Life vs. Poya International 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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