Correlation Between Liton Technology and ALFORMER Industrial
Can any of the company-specific risk be diversified away by investing in both Liton Technology and ALFORMER Industrial 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 Liton Technology and ALFORMER Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liton Technology and ALFORMER Industrial Co, you can compare the effects of market volatilities on Liton Technology and ALFORMER Industrial 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 Liton Technology with a short position of ALFORMER Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liton Technology and ALFORMER Industrial.
Diversification Opportunities for Liton Technology and ALFORMER Industrial
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liton and ALFORMER is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Liton Technology and ALFORMER Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALFORMER Industrial and Liton Technology 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 Liton Technology are associated (or correlated) with ALFORMER Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALFORMER Industrial has no effect on the direction of Liton Technology i.e., Liton Technology and ALFORMER Industrial go up and down completely randomly.
Pair Corralation between Liton Technology and ALFORMER Industrial
Assuming the 90 days trading horizon Liton Technology is expected to generate 0.48 times more return on investment than ALFORMER Industrial. However, Liton Technology is 2.1 times less risky than ALFORMER Industrial. It trades about 0.29 of its potential returns per unit of risk. ALFORMER Industrial Co is currently generating about -0.06 per unit of risk. If you would invest 3,490 in Liton Technology on August 30, 2024 and sell it today you would earn a total of 635.00 from holding Liton Technology or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liton Technology vs. ALFORMER Industrial Co
Performance |
| Timeline |
| Liton Technology |
| ALFORMER Industrial |
Liton Technology and ALFORMER Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liton Technology and ALFORMER Industrial
The main advantage of trading using opposite Liton Technology and ALFORMER Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liton Technology position performs unexpectedly, ALFORMER Industrial 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 ALFORMER Industrial will offset losses from the drop in ALFORMER Industrial's long position.| Liton Technology vs. Prosperity Dielectrics Co | Liton Technology vs. Lelon Electronics Corp | Liton Technology vs. Wafer Works | Liton Technology vs. INPAQ Technology Co |
| ALFORMER Industrial vs. Sporton International | ALFORMER Industrial vs. Great China Metal | ALFORMER Industrial vs. Feng Ching Metal | ALFORMER Industrial vs. Ibase Gaming |
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 Stocks Directory module to find actively traded stocks across global markets.
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