Correlation Between Ligitek Electronics and Allied Circuit
Can any of the company-specific risk be diversified away by investing in both Ligitek Electronics and Allied Circuit 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 Allied Circuit 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 Allied Circuit Co, you can compare the effects of market volatilities on Ligitek Electronics and Allied Circuit 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 Allied Circuit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ligitek Electronics and Allied Circuit.
Diversification Opportunities for Ligitek Electronics and Allied Circuit
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ligitek and Allied is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Allied Circuit Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Circuit 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 Allied Circuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Circuit has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Allied Circuit go up and down completely randomly.
Pair Corralation between Ligitek Electronics and Allied Circuit
Assuming the 90 days trading horizon Ligitek Electronics Co is expected to generate 1.19 times more return on investment than Allied Circuit. However, Ligitek Electronics is 1.19 times more volatile than Allied Circuit Co. It trades about 0.12 of its potential returns per unit of risk. Allied Circuit Co is currently generating about 0.0 per unit of risk. If you would invest 1,955 in Ligitek Electronics Co on September 15, 2024 and sell it today you would earn a total of 2,595 from holding Ligitek Electronics Co or generate 132.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.62% |
| Values | Daily Returns |
Ligitek Electronics Co vs. Allied Circuit Co
Performance |
| Timeline |
| Ligitek Electronics |
| Allied Circuit |
Ligitek Electronics and Allied Circuit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ligitek Electronics and Allied Circuit
The main advantage of trading using opposite Ligitek Electronics and Allied Circuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Allied Circuit 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 Allied Circuit will offset losses from the drop in Allied Circuit's long position.| Ligitek Electronics vs. ANJI Technology Co | Ligitek Electronics vs. Emerging Display Technologies | Ligitek Electronics vs. U Tech Media Corp | Ligitek Electronics vs. Ruentex Development Co |
| Allied Circuit vs. Central Reinsurance Corp | Allied Circuit vs. Sports Gear Co | Allied Circuit vs. Sunspring Metal Corp | Allied Circuit vs. Chinese Maritime Transport |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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