Correlation Between Ligitek Electronics and Ablerex Electronics
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Ablerex 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 Ablerex 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 Ablerex Electronics Co, you can compare the effects of market volatilities on Ligitek Electronics and Ablerex 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 Ablerex Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Ablerex Electronics.
Diversification Opportunities for Ligitek Electronics and Ablerex Electronics
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ligitek and Ablerex is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Ablerex Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ablerex 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 Ablerex Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ablerex Electronics has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Ablerex Electronics go up and down completely randomly.
Pair Corralation between Ligitek Electronics and Ablerex Electronics
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to under-perform the Ablerex Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Ligitek Electronics Co is 1.08 times less risky than Ablerex Electronics. The stock trades about -0.03 of its potential returns per unit of risk. The Ablerex Electronics Co is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,115 in Ablerex Electronics Co on August 30, 2024 and sell it today you would earn a total of 995.00 from holding Ablerex Electronics Co or generate 24.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ligitek Electronics Co vs. Ablerex Electronics Co
Performance |
| Timeline |
| Ligitek Electronics |
| Ablerex Electronics |
Ligitek Electronics and Ablerex Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and Ablerex Electronics
The main advantage of trading using opposite Ligitek Electronics and Ablerex Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Ablerex 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 Ablerex Electronics will offset losses from the drop in Ablerex Electronics' long position.| Ligitek Electronics vs. Hon Hai Precision | Ligitek Electronics vs. Delta Electronics | Ligitek Electronics vs. LARGAN Precision Co | Ligitek Electronics vs. E Ink Holdings |
| Ablerex Electronics vs. Hon Hai Precision | Ablerex Electronics vs. Delta Electronics | Ablerex Electronics vs. LARGAN Precision Co | Ablerex Electronics vs. E Ink Holdings |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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