Correlation Between Ligitek Electronics and Chunghwa Precision
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Chunghwa Precision 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 Chunghwa Precision 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 Chunghwa Precision Test, you can compare the effects of market volatilities on Ligitek Electronics and Chunghwa Precision 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 Chunghwa Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Chunghwa Precision.
Diversification Opportunities for Ligitek Electronics and Chunghwa Precision
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ligitek and Chunghwa is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Chunghwa Precision Test in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chunghwa Precision Test 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 Chunghwa Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chunghwa Precision Test has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Chunghwa Precision go up and down completely randomly.
Pair Corralation between Ligitek Electronics and Chunghwa Precision
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to under-perform the Chunghwa Precision. In addition to that, Ligitek Electronics is 1.32 times more volatile than Chunghwa Precision Test. It trades about -0.2 of its total potential returns per unit of risk. Chunghwa Precision Test is currently generating about -0.2 per unit of volatility. If you would invest 68,200 in Chunghwa Precision Test on January 13, 2025 and sell it today you would lose (14,100) from holding Chunghwa Precision Test or give up 20.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ligitek Electronics Co vs. Chunghwa Precision Test
Performance |
| Timeline |
| Ligitek Electronics |
| Chunghwa Precision Test |
Ligitek Electronics and Chunghwa Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and Chunghwa Precision
The main advantage of trading using opposite Ligitek Electronics and Chunghwa Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Chunghwa Precision 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 Chunghwa Precision will offset losses from the drop in Chunghwa Precision's long position.| Ligitek Electronics vs. Newretail Co | Ligitek Electronics vs. Kedge Construction Co | Ligitek Electronics vs. Mercuries Life Insurance | Ligitek Electronics vs. Hannstar Display Corp |
| Chunghwa Precision vs. Hon Hai Precision | Chunghwa Precision vs. Delta Electronics | Chunghwa Precision vs. LARGAN Precision Co | Chunghwa Precision 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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