Correlation Between Leader Steel and Choo Bee
Can any of the company-specific risk be diversified away by investing in both Leader Steel and Choo Bee 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 Leader Steel and Choo Bee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Steel Holdings and Choo Bee Metal, you can compare the effects of market volatilities on Leader Steel and Choo Bee 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 Leader Steel with a short position of Choo Bee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Steel and Choo Bee.
Diversification Opportunities for Leader Steel and Choo Bee
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Leader and Choo is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Leader Steel Holdings and Choo Bee Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choo Bee Metal and Leader Steel 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 Leader Steel Holdings are associated (or correlated) with Choo Bee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choo Bee Metal has no effect on the direction of Leader Steel i.e., Leader Steel and Choo Bee go up and down completely randomly.
Pair Corralation between Leader Steel and Choo Bee
Assuming the 90 days trading horizon Leader Steel Holdings is expected to generate 1.72 times more return on investment than Choo Bee. However, Leader Steel is 1.72 times more volatile than Choo Bee Metal. It trades about 0.01 of its potential returns per unit of risk. Choo Bee Metal is currently generating about 0.0 per unit of risk. If you would invest 41.00 in Leader Steel Holdings on October 10, 2024 and sell it today you would earn a total of 0.00 from holding Leader Steel Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leader Steel Holdings vs. Choo Bee Metal
Performance |
| Timeline |
| Leader Steel Holdings |
| Choo Bee Metal |
Leader Steel and Choo Bee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leader Steel and Choo Bee
The main advantage of trading using opposite Leader Steel and Choo Bee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Steel position performs unexpectedly, Choo Bee 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 Choo Bee will offset losses from the drop in Choo Bee's long position.| Leader Steel vs. Minetech Resources Bhd | Leader Steel vs. MClean Technologies Bhd | Leader Steel vs. K One Technology Bhd | Leader Steel vs. Star Media Group |
| Choo Bee vs. DC HEALTHCARE HOLDINGS | Choo Bee vs. Cosmos Technology International | Choo Bee vs. Cloudpoint Technology Berhad | Choo Bee vs. Datasonic Group Bhd |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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