Correlation Between PChome Online and Ligitek Electronics
Can any of the company-specific risk be diversified away by investing in both PChome Online 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 PChome Online and Ligitek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PChome Online and Ligitek Electronics Co, you can compare the effects of market volatilities on PChome Online 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 PChome Online with a short position of Ligitek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PChome Online and Ligitek Electronics.
Diversification Opportunities for PChome Online and Ligitek Electronics
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PChome and Ligitek is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PChome Online and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and PChome Online 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 PChome Online 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 PChome Online i.e., PChome Online and Ligitek Electronics go up and down completely randomly.
Pair Corralation between PChome Online and Ligitek Electronics
Assuming the 90 days trading horizon PChome Online is expected to generate 8.6 times less return on investment than Ligitek Electronics. But when comparing it to its historical volatility, PChome Online is 1.11 times less risky than Ligitek Electronics. It trades about 0.02 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,115 in Ligitek Electronics Co on November 3, 2024 and sell it today you would earn a total of 3,085 from holding Ligitek Electronics Co or generate 145.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PChome Online vs. Ligitek Electronics Co
Performance |
| Timeline |
| PChome Online |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ligitek Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
PChome Online and Ligitek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PChome Online and Ligitek Electronics
The main advantage of trading using opposite PChome Online and Ligitek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PChome Online 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.The idea behind PChome Online and Ligitek Electronics Co 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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