Correlation Between Leatec Fine and CKM Building
Can any of the company-specific risk be diversified away by investing in both Leatec Fine and CKM Building 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 CKM Building 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 CKM Building Material, you can compare the effects of market volatilities on Leatec Fine and CKM Building 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 CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leatec Fine and CKM Building.
Diversification Opportunities for Leatec Fine and CKM Building
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leatec and CKM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of Leatec Fine i.e., Leatec Fine and CKM Building go up and down completely randomly.
Pair Corralation between Leatec Fine and CKM Building
Assuming the 90 days trading horizon Leatec Fine Ceramics is expected to generate 1.69 times more return on investment than CKM Building. However, Leatec Fine is 1.69 times more volatile than CKM Building Material. It trades about 0.05 of its potential returns per unit of risk. CKM Building Material is currently generating about -0.08 per unit of risk. If you would invest 2,835 in Leatec Fine Ceramics on September 1, 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 Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Leatec Fine Ceramics vs. CKM Building Material
Performance |
| Timeline |
| Leatec Fine Ceramics |
| CKM Building Material |
Leatec Fine and CKM Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leatec Fine and CKM Building
The main advantage of trading using opposite Leatec Fine and CKM Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leatec Fine position performs unexpectedly, CKM Building 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 CKM Building will offset losses from the drop in CKM Building's long position.| Leatec Fine vs. First Insurance Co | Leatec Fine vs. Sports Gear Co | Leatec Fine vs. Evergreen International Storage | Leatec Fine vs. Information Technology Total |
| CKM Building vs. Formosa International Hotels | CKM Building vs. Sporton International | CKM Building vs. HOYA Resort Hotel | CKM Building vs. Thermaltake Technology 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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