Correlation Between LK Engineering and Asia Optical
Can any of the company-specific risk be diversified away by investing in both LK Engineering and Asia Optical 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 LK Engineering and Asia Optical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LK Engineering Co and Asia Optical Co, you can compare the effects of market volatilities on LK Engineering and Asia Optical 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 LK Engineering with a short position of Asia Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LK Engineering and Asia Optical.
Diversification Opportunities for LK Engineering and Asia Optical
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6139 and Asia is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding LK Engineering Co and Asia Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Optical and LK Engineering 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 LK Engineering Co are associated (or correlated) with Asia Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Optical has no effect on the direction of LK Engineering i.e., LK Engineering and Asia Optical go up and down completely randomly.
Pair Corralation between LK Engineering and Asia Optical
Assuming the 90 days trading horizon LK Engineering Co is expected to generate 1.61 times more return on investment than Asia Optical. However, LK Engineering is 1.61 times more volatile than Asia Optical Co. It trades about 0.12 of its potential returns per unit of risk. Asia Optical Co is currently generating about 0.06 per unit of risk. If you would invest 3,810 in LK Engineering Co on September 2, 2024 and sell it today you would earn a total of 19,190 from holding LK Engineering Co or generate 503.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LK Engineering Co vs. Asia Optical Co
Performance |
| Timeline |
| LK Engineering |
| Asia Optical |
LK Engineering and Asia Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LK Engineering and Asia Optical
The main advantage of trading using opposite LK Engineering and Asia Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LK Engineering position performs unexpectedly, Asia Optical 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 Asia Optical will offset losses from the drop in Asia Optical's long position.| LK Engineering vs. United Integrated Services | LK Engineering vs. Topco Scientific Co | LK Engineering vs. Marketech International Corp | LK Engineering vs. Asia Optical Co |
| Asia Optical vs. LARGAN Precision Co | Asia Optical vs. Novatek Microelectronics Corp | Asia Optical vs. Genius Electronic Optical | Asia Optical vs. Catcher 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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