Correlation Between Leatec Fine and Global Unichip
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and Global Unichip 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 Leatec Fine and Global Unichip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leatec Fine Ceramics and Global Unichip Corp, you can compare the effects of market volatilities on Leatec Fine and Global Unichip 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 Leatec Fine with a short position of Global Unichip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and Global Unichip.
Diversification Opportunities for Leatec Fine and Global Unichip
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leatec and Global is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and Global Unichip Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Unichip Corp and Leatec Fine 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 Leatec Fine Ceramics are associated (or correlated) with Global Unichip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Unichip Corp has no effect on the direction of Leatec Fine i.e., Leatec Fine and Global Unichip go up and down completely randomly.
Pair Corralation between Leatec Fine and Global Unichip
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to generate 0.69 times more return on investment than Global Unichip. However, Leatec Fine Ceramics is 1.44 times less risky than Global Unichip. It trades about 0.05 of its potential returns per unit of risk. Global Unichip Corp is currently generating about -0.04 per unit of risk. If you would invest 2,835 in Leatec Fine Ceramics on August 31, 2024 and sell it today you would earn a total of 45.00 from holding Leatec Fine Ceramics or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.3% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. Global Unichip Corp
Performance |
| Timeline |
| Leatec Fine Ceramics |
| Global Unichip Corp |
Leatec Fine and Global Unichip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and Global Unichip
The main advantage of trading using opposite Leatec Fine and Global Unichip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, Global Unichip 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 Global Unichip will offset losses from the drop in Global Unichip's long position.| Leatec Fine vs. Hung Sheng Construction | Leatec Fine vs. Silicon Power Computer | Leatec Fine vs. Qualipoly Chemical Corp | Leatec Fine vs. Chi Sheng Chemical |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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