Correlation Between Asmedia Technology and Lelon Electronics
Can any of the company-specific risk be diversified away by investing in both Asmedia Technology and Lelon 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 Asmedia Technology and Lelon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asmedia Technology and Lelon Electronics Corp, you can compare the effects of market volatilities on Asmedia Technology and Lelon 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 Asmedia Technology with a short position of Lelon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asmedia Technology and Lelon Electronics.
Diversification Opportunities for Asmedia Technology and Lelon Electronics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Asmedia and Lelon is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Asmedia Technology and Lelon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lelon Electronics Corp and Asmedia 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 Asmedia Technology are associated (or correlated) with Lelon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lelon Electronics Corp has no effect on the direction of Asmedia Technology i.e., Asmedia Technology and Lelon Electronics go up and down completely randomly.
Pair Corralation between Asmedia Technology and Lelon Electronics
Assuming the 90 days trading horizon Asmedia Technology is expected to generate 2.12 times less return on investment than Lelon Electronics. In addition to that, Asmedia Technology is 1.57 times more volatile than Lelon Electronics Corp. It trades about 0.02 of its total potential returns per unit of risk. Lelon Electronics Corp is currently generating about 0.08 per unit of volatility. If you would invest 7,210 in Lelon Electronics Corp on November 3, 2024 and sell it today you would earn a total of 3,040 from holding Lelon Electronics Corp or generate 42.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asmedia Technology vs. Lelon Electronics Corp
Performance |
| Timeline |
| Asmedia Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Lelon Electronics Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Asmedia Technology and Lelon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asmedia Technology and Lelon Electronics
The main advantage of trading using opposite Asmedia Technology and Lelon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asmedia Technology position performs unexpectedly, Lelon 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 Lelon Electronics will offset losses from the drop in Lelon Electronics' long position.The idea behind Asmedia Technology and Lelon Electronics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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