Correlation Between Integrated Electronic and Leyard Optoelectronic

Can any of the company-specific risk be diversified away by investing in both Integrated Electronic and Leyard Optoelectronic 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 Integrated Electronic and Leyard Optoelectronic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Integrated Electronic Systems and Leyard Optoelectronic, you can compare the effects of market volatilities on Integrated Electronic and Leyard Optoelectronic 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 Integrated Electronic with a short position of Leyard Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Integrated Electronic and Leyard Optoelectronic.

Diversification Opportunities for Integrated Electronic and Leyard Optoelectronic

0.76

Correlation Coefficient

Integrated Electronic  Leyard Optoelectronic

Poor diversification

The 3 months correlation between Integrated and Leyard is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Integrated Electronic Systems and Leyard Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyard Optoelectronic and Integrated Electronic 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 Integrated Electronic Systems are associated (or correlated) with Leyard Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyard Optoelectronic has no effect on the direction of Integrated Electronic i.e., Integrated Electronic and Leyard Optoelectronic go up and down completely randomly.

Pair Corralation between Integrated Electronic and Leyard Optoelectronic

Assuming the 90 days trading horizon Integrated Electronic Systems is expected to under-perform the Leyard Optoelectronic. But the stock apears to be less risky and, when comparing its historical volatility, Integrated Electronic Systems is 1.42 times less risky than Leyard Optoelectronic. The stock trades about -0.13 of its potential returns per unit of risk. The Leyard Optoelectronic is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  589.00  in Leyard Optoelectronic on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Leyard Optoelectronic or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Integrated Electronic Systems  vs.  Leyard Optoelectronic

Integrated Electronic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Electronic Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Leyard Optoelectronic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Leyard Optoelectronic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Leyard Optoelectronic may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Integrated Electronic and Leyard Optoelectronic

The main advantage of trading using opposite Integrated Electronic and Leyard Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Integrated Electronic position performs unexpectedly, Leyard Optoelectronic 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 Leyard Optoelectronic will offset losses from the drop in Leyard Optoelectronic's long position.

The idea behind Integrated Electronic Systems and Leyard Optoelectronic pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.