Correlation Between Holtek Semiconductor and Leatec Fine
Can any of the company-specific risk be diversified away by investing in both Holtek Semiconductor and Leatec Fine 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 Holtek Semiconductor and Leatec Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holtek Semiconductor and Leatec Fine Ceramics, you can compare the effects of market volatilities on Holtek Semiconductor and Leatec Fine 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 Holtek Semiconductor with a short position of Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holtek Semiconductor and Leatec Fine.
Diversification Opportunities for Holtek Semiconductor and Leatec Fine
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Holtek and Leatec is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Holtek Semiconductor and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics and Holtek Semiconductor 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 Holtek Semiconductor are associated (or correlated) with Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of Holtek Semiconductor i.e., Holtek Semiconductor and Leatec Fine go up and down completely randomly.
Pair Corralation between Holtek Semiconductor and Leatec Fine
Assuming the 90 days trading horizon Holtek Semiconductor is expected to under-perform the Leatec Fine. But the stock apears to be less risky and, when comparing its historical volatility, Holtek Semiconductor is 1.48 times less risky than Leatec Fine. The stock trades about -0.03 of its potential returns per unit of risk. The Leatec Fine Ceramics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,780 in Leatec Fine Ceramics on November 9, 2024 and sell it today you would earn a total of 930.00 from holding Leatec Fine Ceramics or generate 52.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Holtek Semiconductor vs. Leatec Fine Ceramics
Performance |
| Timeline |
| Holtek Semiconductor |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Leatec Fine Ceramics |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Holtek Semiconductor and Leatec Fine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holtek Semiconductor and Leatec Fine
The main advantage of trading using opposite Holtek Semiconductor and Leatec Fine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holtek Semiconductor position performs unexpectedly, Leatec Fine 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 Leatec Fine will offset losses from the drop in Leatec Fine's long position.The idea behind Holtek Semiconductor and Leatec Fine Ceramics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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