Correlation Between Ligitek Electronics and Asmedia Technology
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Asmedia Technology 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 Asmedia Technology 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 Asmedia Technology, you can compare the effects of market volatilities on Ligitek Electronics and Asmedia Technology 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 Asmedia Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Asmedia Technology.
Diversification Opportunities for Ligitek Electronics and Asmedia Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ligitek and Asmedia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Asmedia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asmedia Technology 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 Asmedia Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asmedia Technology has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Asmedia Technology go up and down completely randomly.
Pair Corralation between Ligitek Electronics and Asmedia Technology
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to generate 0.93 times more return on investment than Asmedia Technology. However, Ligitek Electronics Co is 1.07 times less risky than Asmedia Technology. It trades about 0.13 of its potential returns per unit of risk. Asmedia Technology is currently generating about 0.02 per unit of risk. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligitek Electronics Co vs. Asmedia Technology
Performance |
| Timeline |
| Ligitek Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Asmedia Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Ligitek Electronics and Asmedia Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and Asmedia Technology
The main advantage of trading using opposite Ligitek Electronics and Asmedia Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Asmedia Technology 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 Asmedia Technology will offset losses from the drop in Asmedia Technology's long position.The idea behind Ligitek Electronics Co and Asmedia Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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