Correlation Between Insyde Software and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both Insyde Software and Ligitek 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 Insyde Software and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insyde Software and Ligitek Electronics Co, you can compare the effects of market volatilities on Insyde Software and Ligitek 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 Insyde Software with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insyde Software and Ligitek Electronics.
Diversification Opportunities for Insyde Software and Ligitek Electronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insyde and Ligitek is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Insyde Software and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Insyde Software 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 Insyde Software are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Insyde Software i.e., Insyde Software and Ligitek Electronics go up and down completely randomly.
Pair Corralation between Insyde Software and Ligitek Electronics
Assuming the 90 days trading horizon Insyde Software is expected to generate 0.77 times more return on investment than Ligitek Electronics. However, Insyde Software is 1.3 times less risky than Ligitek Electronics. It trades about -0.18 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about -0.23 per unit of risk. If you would invest 54,700 in Insyde Software on August 26, 2024 and sell it today you would lose (5,000) from holding Insyde Software or give up 9.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insyde Software vs. Ligitek Electronics Co
Performance |
| Timeline |
| Insyde Software |
| Ligitek Electronics |
Insyde Software and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insyde Software and Ligitek Electronics
The main advantage of trading using opposite Insyde Software and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insyde Software position performs unexpectedly, Ligitek 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 Ligitek Electronics will offset losses from the drop in Ligitek Electronics' long position.| Insyde Software vs. Provision Information CoLtd | Insyde Software vs. Ruentex Development Co | Insyde Software vs. Symtek Automation Asia | Insyde Software vs. Leatec Fine Ceramics |
| Ligitek Electronics vs. Unique Optical Industrial | Ligitek Electronics vs. Powertech Industrial Co | Ligitek Electronics vs. Insyde Software | Ligitek Electronics vs. Central Reinsurance Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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