Correlation Between LEENO Industrial and Cube Entertainment

Can any of the company-specific risk be diversified away by investing in both LEENO Industrial and Cube Entertainment 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 LEENO Industrial and Cube Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between LEENO Industrial and Cube Entertainment, you can compare the effects of market volatilities on LEENO Industrial and Cube Entertainment 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 LEENO Industrial with a short position of Cube Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEENO Industrial and Cube Entertainment.

Diversification Opportunities for LEENO Industrial and Cube Entertainment

-0.14

Correlation Coefficient

LEENO Industrial  Cube Entertainment

Good diversification

The 3 months correlation between LEENO and Cube is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding LEENO Industrial and Cube Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cube Entertainment and LEENO Industrial 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 LEENO Industrial are associated (or correlated) with Cube Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cube Entertainment has no effect on the direction of LEENO Industrial i.e., LEENO Industrial and Cube Entertainment go up and down completely randomly.

Pair Corralation between LEENO Industrial and Cube Entertainment

Assuming the 90 days trading horizon LEENO Industrial is expected to under-perform the Cube Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, LEENO Industrial is 1.13 times less risky than Cube Entertainment. The stock trades about -0.04 of its potential returns per unit of risk. The Cube Entertainment is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,378,000  in Cube Entertainment on December 2, 2024 and sell it today you would earn a total of  271,000  from holding Cube Entertainment or generate 19.67% return on investment over 90 days.

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

LEENO Industrial  vs.  Cube Entertainment

LEENO Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LEENO Industrial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LEENO Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Cube Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cube Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cube Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LEENO Industrial and Cube Entertainment

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

The idea behind LEENO Industrial and Cube Entertainment 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.