Correlation Between Leo Global and Mega Lifesciences
Can any of the company-specific risk be diversified away by investing in both Leo Global and Mega Lifesciences 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 Leo Global and Mega Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leo Global Logistics and Mega Lifesciences Public, you can compare the effects of market volatilities on Leo Global and Mega Lifesciences 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 Leo Global with a short position of Mega Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leo Global and Mega Lifesciences.
Diversification Opportunities for Leo Global and Mega Lifesciences
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Leo and Mega is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Leo Global Logistics and Mega Lifesciences Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Lifesciences Public and Leo Global 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 Leo Global Logistics are associated (or correlated) with Mega Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Lifesciences Public has no effect on the direction of Leo Global i.e., Leo Global and Mega Lifesciences go up and down completely randomly.
Pair Corralation between Leo Global and Mega Lifesciences
Assuming the 90 days trading horizon Leo Global Logistics is expected to generate 0.84 times more return on investment than Mega Lifesciences. However, Leo Global Logistics is 1.19 times less risky than Mega Lifesciences. It trades about -0.19 of its potential returns per unit of risk. Mega Lifesciences Public is currently generating about -0.22 per unit of risk. If you would invest 386.00 in Leo Global Logistics on August 31, 2024 and sell it today you would lose (26.00) from holding Leo Global Logistics or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Leo Global Logistics vs. Mega Lifesciences Public
Performance |
| Timeline |
| Leo Global Logistics |
| Mega Lifesciences Public |
Leo Global and Mega Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leo Global and Mega Lifesciences
The main advantage of trading using opposite Leo Global and Mega Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leo Global position performs unexpectedly, Mega Lifesciences 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 Mega Lifesciences will offset losses from the drop in Mega Lifesciences' long position.| Leo Global vs. Mega Lifesciences Public | Leo Global vs. Sonic Interfreight Public | Leo Global vs. Jay Mart Public | Leo Global vs. AP Public |
| Mega Lifesciences vs. AP Public | Mega Lifesciences vs. Bumrungrad Hospital Public | Mega Lifesciences vs. Advanced Information Technology | Mega Lifesciences vs. AJ Plast Public |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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