Correlation Between Prosperity Dielectrics and Lelon Electronics
Can any of the company-specific risk be diversified away by investing in both Prosperity Dielectrics and Lelon Electronics 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 Prosperity Dielectrics and Lelon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosperity Dielectrics Co and Lelon Electronics Corp, you can compare the effects of market volatilities on Prosperity Dielectrics and Lelon Electronics 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 Prosperity Dielectrics with a short position of Lelon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosperity Dielectrics and Lelon Electronics.
Diversification Opportunities for Prosperity Dielectrics and Lelon Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prosperity and Lelon is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Prosperity Dielectrics Co and Lelon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lelon Electronics Corp and Prosperity Dielectrics 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 Prosperity Dielectrics Co are associated (or correlated) with Lelon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lelon Electronics Corp has no effect on the direction of Prosperity Dielectrics i.e., Prosperity Dielectrics and Lelon Electronics go up and down completely randomly.
Pair Corralation between Prosperity Dielectrics and Lelon Electronics
Assuming the 90 days trading horizon Prosperity Dielectrics Co is expected to under-perform the Lelon Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Prosperity Dielectrics Co is 1.46 times less risky than Lelon Electronics. The stock trades about -0.04 of its potential returns per unit of risk. The Lelon Electronics Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,050 in Lelon Electronics Corp on November 28, 2024 and sell it today you would earn a total of 910.00 from holding Lelon Electronics Corp or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.16% |
| Values | Daily Returns |
Prosperity Dielectrics Co vs. Lelon Electronics Corp
Performance |
| Timeline |
| Prosperity Dielectrics |
| Lelon Electronics Corp |
Prosperity Dielectrics and Lelon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosperity Dielectrics and Lelon Electronics
The main advantage of trading using opposite Prosperity Dielectrics and Lelon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosperity Dielectrics position performs unexpectedly, Lelon Electronics 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 Lelon Electronics will offset losses from the drop in Lelon Electronics' long position.| Prosperity Dielectrics vs. Walsin Technology Corp | Prosperity Dielectrics vs. Yageo Corp | Prosperity Dielectrics vs. Wafer Works | Prosperity Dielectrics vs. Chipbond Technology |
| Lelon Electronics vs. TA I Technology Co | Lelon Electronics vs. Walsin Technology Corp | Lelon Electronics vs. Greatek Electronics | Lelon Electronics vs. Pan Jit International |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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