Correlation Between Ligitek Electronics and C Media
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and C Media 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 C Media 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 C Media Electronics, you can compare the effects of market volatilities on Ligitek Electronics and C Media 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 C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and C Media.
Diversification Opportunities for Ligitek Electronics and C Media
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ligitek and 6237 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media 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 C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and C Media go up and down completely randomly.
Pair Corralation between Ligitek Electronics and C Media
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to generate 1.08 times more return on investment than C Media. However, Ligitek Electronics is 1.08 times more volatile than C Media Electronics. It trades about 0.11 of its potential returns per unit of risk. C Media Electronics is currently generating about -0.02 per unit of risk. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligitek Electronics Co vs. C Media Electronics
Performance |
| Timeline |
| Ligitek Electronics |
| C Media Electronics |
Ligitek Electronics and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and C Media
The main advantage of trading using opposite Ligitek Electronics and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.| Ligitek Electronics vs. U Media Communications | Ligitek Electronics vs. ESUN Financial Holding | Ligitek Electronics vs. Data International Co | Ligitek Electronics vs. Otsuka Information Technology |
| C Media vs. Dawushan Farm Tech | C Media vs. Standard Foods Corp | C Media vs. Lihtai Construction Enterprise | C Media vs. Central Reinsurance 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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