Correlation Between U Media and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both U Media 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 U Media and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Media Communications and Ligitek Electronics Co, you can compare the effects of market volatilities on U Media 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 U Media with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Ligitek Electronics.
Diversification Opportunities for U Media and Ligitek Electronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 6470 and Ligitek is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and U Media 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 U Media Communications 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 U Media i.e., U Media and Ligitek Electronics go up and down completely randomly.
Pair Corralation between U Media and Ligitek Electronics
Assuming the 90 days trading horizon U Media Communications is expected to under-perform the Ligitek Electronics. But the stock apears to be less risky and, when comparing its historical volatility, U Media Communications is 1.81 times less risky than Ligitek Electronics. The stock trades about -0.06 of its potential returns per unit of risk. The Ligitek Electronics Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,925 in Ligitek Electronics Co on September 2, 2024 and sell it today you would earn a total of 2,020 from holding Ligitek Electronics Co or generate 104.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Ligitek Electronics Co
Performance |
| Timeline |
| U Media Communications |
| Ligitek Electronics |
U Media and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Ligitek Electronics
The main advantage of trading using opposite U Media and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media 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.| U Media vs. Accton Technology Corp | U Media vs. HTC Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Arcadyan Technology Corp |
| Ligitek Electronics vs. U Media Communications | Ligitek Electronics vs. ESUN Financial Holding | Ligitek Electronics vs. Data International Co | Ligitek Electronics vs. Otsuka Information Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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