Correlation Between Leatec Fine and HIM International
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and HIM International 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 HIM International 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 HIM International Music, you can compare the effects of market volatilities on Leatec Fine and HIM International 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 HIM International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and HIM International.
Diversification Opportunities for Leatec Fine and HIM International
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Leatec and HIM is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and HIM International Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HIM International Music 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 HIM International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HIM International Music has no effect on the direction of Leatec Fine i.e., Leatec Fine and HIM International go up and down completely randomly.
Pair Corralation between Leatec Fine and HIM International
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to under-perform the HIM International. In addition to that, Leatec Fine is 1.36 times more volatile than HIM International Music. It trades about -0.01 of its total potential returns per unit of risk. HIM International Music is currently generating about 0.11 per unit of volatility. If you would invest 11,700 in HIM International Music on August 30, 2024 and sell it today you would earn a total of 450.00 from holding HIM International Music or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. HIM International Music
Performance |
| Timeline |
| Leatec Fine Ceramics |
| HIM International Music |
Leatec Fine and HIM International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and HIM International
The main advantage of trading using opposite Leatec Fine and HIM International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, HIM International 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 HIM International will offset losses from the drop in HIM International's long position.| Leatec Fine vs. Taiwan Semiconductor Manufacturing | Leatec Fine vs. MediaTek | Leatec Fine vs. United Microelectronics | Leatec Fine vs. Novatek Microelectronics Corp |
| HIM International vs. K Way Information | HIM International vs. BenQ Medical Technology | HIM International vs. Sporton International | HIM International vs. Otsuka Information Technology |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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