Correlation Between Ligitek Electronics and Taisol Electronics
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Taisol 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 Ligitek Electronics and Taisol Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ligitek Electronics Co and Taisol Electronics Co, you can compare the effects of market volatilities on Ligitek Electronics and Taisol 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 Ligitek Electronics with a short position of Taisol Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Taisol Electronics.
Diversification Opportunities for Ligitek Electronics and Taisol Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ligitek and Taisol is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Taisol Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taisol Electronics and Ligitek Electronics 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 Ligitek Electronics Co are associated (or correlated) with Taisol Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taisol Electronics has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Taisol Electronics go up and down completely randomly.
Pair Corralation between Ligitek Electronics and Taisol Electronics
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to under-perform the Taisol Electronics. In addition to that, Ligitek Electronics is 1.18 times more volatile than Taisol Electronics Co. It trades about -0.05 of its total potential returns per unit of risk. Taisol Electronics Co is currently generating about 0.2 per unit of volatility. If you would invest 6,500 in Taisol Electronics Co on August 31, 2024 and sell it today you would earn a total of 780.00 from holding Taisol Electronics Co or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligitek Electronics Co vs. Taisol Electronics Co
Performance |
| Timeline |
| Ligitek Electronics |
| Taisol Electronics |
Ligitek Electronics and Taisol Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and Taisol Electronics
The main advantage of trading using opposite Ligitek Electronics and Taisol Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Taisol 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 Taisol Electronics will offset losses from the drop in Taisol Electronics' long position.| Ligitek Electronics vs. Hon Hai Precision | Ligitek Electronics vs. Delta Electronics | Ligitek Electronics vs. LARGAN Precision Co | Ligitek Electronics vs. Yageo Corp |
| Taisol Electronics vs. Hon Hai Precision | Taisol Electronics vs. Delta Electronics | Taisol Electronics vs. LARGAN Precision Co | Taisol Electronics vs. Yageo 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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