Correlation Between Lealea Enterprise and Nantex Industry

Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Nantex Industry 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 Nantex Industry 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 Nantex Industry Co, you can compare the effects of market volatilities on Lealea Enterprise and Nantex Industry 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 Nantex Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Nantex Industry.

Diversification Opportunities for Lealea Enterprise and Nantex Industry

0.37

Correlation Coefficient

Lealea Enterprise  Nantex Industry

Weak diversification

The 3 months correlation between Lealea and Nantex is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry 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 Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Nantex Industry go up and down completely randomly.

Pair Corralation between Lealea Enterprise and Nantex Industry

Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 0.7 times more return on investment than Nantex Industry. However, Lealea Enterprise Co is 1.43 times less risky than Nantex Industry. It trades about -0.03 of its potential returns per unit of risk. Nantex Industry Co is currently generating about -0.03 per unit of risk. If you would invest  1,035  in Lealea Enterprise Co on September 20, 2024 and sell it today you would lose (119.00) from holding Lealea Enterprise Co or give up 11.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.59%
Values	Daily Returns

Lealea Enterprise Co  vs.  Nantex Industry Co

Lealea Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lealea Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lealea Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nantex Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nantex Industry Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Lealea Enterprise and Nantex Industry

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

The idea behind Lealea Enterprise Co and Nantex Industry Co 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.