Correlation Between Lealea Enterprise and Chia Hsin
Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Chia Hsin 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 Lealea Enterprise and Chia Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lealea Enterprise Co and Chia Hsin Cement, you can compare the effects of market volatilities on Lealea Enterprise and Chia Hsin 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 Lealea Enterprise with a short position of Chia Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Chia Hsin.
Diversification Opportunities for Lealea Enterprise and Chia Hsin
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lealea and Chia is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Chia Hsin Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Hsin Cement and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with Chia Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Hsin Cement has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Chia Hsin go up and down completely randomly.
Pair Corralation between Lealea Enterprise and Chia Hsin
Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 1.23 times more return on investment than Chia Hsin. However, Lealea Enterprise is 1.23 times more volatile than Chia Hsin Cement. It trades about 0.01 of its potential returns per unit of risk. Chia Hsin Cement is currently generating about -0.01 per unit of risk. If you would invest 929.00 in Lealea Enterprise Co on September 14, 2024 and sell it today you would earn a total of 3.00 from holding Lealea Enterprise Co or generate 0.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Lealea Enterprise Co vs. Chia Hsin Cement
Performance |
Timeline |
Lealea Enterprise |
Chia Hsin Cement |
Lealea Enterprise and Chia Hsin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lealea Enterprise and Chia Hsin
The main advantage of trading using opposite Lealea Enterprise and Chia Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lealea Enterprise position performs unexpectedly, Chia Hsin 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 Chia Hsin will offset losses from the drop in Chia Hsin's long position.Lealea Enterprise vs. Feng Tay Enterprises | Lealea Enterprise vs. Ruentex Development Co | Lealea Enterprise vs. WiseChip Semiconductor | Lealea Enterprise vs. Novatek Microelectronics Corp |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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