Correlation Between Leatec Fine and Cameo Communications
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and Cameo Communications 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 Cameo Communications 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 Cameo Communications, you can compare the effects of market volatilities on Leatec Fine and Cameo Communications 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 Cameo Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and Cameo Communications.
Diversification Opportunities for Leatec Fine and Cameo Communications
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leatec and Cameo is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and Cameo Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameo Communications 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 Cameo Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameo Communications has no effect on the direction of Leatec Fine i.e., Leatec Fine and Cameo Communications go up and down completely randomly.
Pair Corralation between Leatec Fine and Cameo Communications
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to generate 1.19 times more return on investment than Cameo Communications. However, Leatec Fine is 1.19 times more volatile than Cameo Communications. It trades about 0.06 of its potential returns per unit of risk. Cameo Communications is currently generating about 0.03 per unit of risk. If you would invest 1,680 in Leatec Fine Ceramics on August 28, 2024 and sell it today you would earn a total of 1,210 from holding Leatec Fine Ceramics or generate 72.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. Cameo Communications
Performance |
| Timeline |
| Leatec Fine Ceramics |
| Cameo Communications |
Leatec Fine and Cameo Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and Cameo Communications
The main advantage of trading using opposite Leatec Fine and Cameo Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, Cameo Communications 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 Cameo Communications will offset losses from the drop in Cameo Communications' long position.| Leatec Fine vs. Chiu Ting Machinery | Leatec Fine vs. Great Computer | Leatec Fine vs. Ruentex Engineering Construction | Leatec Fine vs. Sesoda Corp |
| Cameo Communications vs. Novatek Microelectronics Corp | Cameo Communications vs. United Microelectronics |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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