Correlation Between Trk Corp and Luo Lih
Can any of the company-specific risk be diversified away by investing in both Trk Corp and Luo Lih 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 Trk Corp and Luo Lih into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trk Corp and Luo Lih Fen, you can compare the effects of market volatilities on Trk Corp and Luo Lih 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 Trk Corp with a short position of Luo Lih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trk Corp and Luo Lih.
Diversification Opportunities for Trk Corp and Luo Lih
Very good diversification
The 3 months correlation between Trk and Luo is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Trk Corp and Luo Lih Fen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Luo Lih Fen and Trk Corp 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 Trk Corp are associated (or correlated) with Luo Lih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Luo Lih Fen has no effect on the direction of Trk Corp i.e., Trk Corp and Luo Lih go up and down completely randomly.
Pair Corralation between Trk Corp and Luo Lih
Assuming the 90 days trading horizon Trk Corp is expected to under-perform the Luo Lih. But the stock apears to be less risky and, when comparing its historical volatility, Trk Corp is 1.42 times less risky than Luo Lih. The stock trades about -0.09 of its potential returns per unit of risk. The Luo Lih Fen is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 5,020 in Luo Lih Fen on December 27, 2024 and sell it today you would lose (70.00) from holding Luo Lih Fen or give up 1.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.21% |
Values | Daily Returns |
Trk Corp vs. Luo Lih Fen
Performance |
Timeline |
Trk Corp |
Luo Lih Fen |
Trk Corp and Luo Lih Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Trk Corp and Luo Lih
The main advantage of trading using opposite Trk Corp and Luo Lih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trk Corp position performs unexpectedly, Luo Lih 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 Luo Lih will offset losses from the drop in Luo Lih's long position.Trk Corp vs. Formosa Taffeta Co | Trk Corp vs. Tainan Spinning Co | Trk Corp vs. Carnival Industrial Corp | Trk Corp vs. Lily Textile Co |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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