Correlation Between Mirle Automation and Lelon Electronics

Can any of the company-specific risk be diversified away by investing in both Mirle Automation and Lelon Electronics 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 Mirle Automation and Lelon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mirle Automation Corp and Lelon Electronics Corp, you can compare the effects of market volatilities on Mirle Automation and Lelon Electronics 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 Mirle Automation with a short position of Lelon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirle Automation and Lelon Electronics.

Diversification Opportunities for Mirle Automation and Lelon Electronics

0.08

Correlation Coefficient

Mirle Automation  Lelon Electronics

Significant diversification

The 3 months correlation between Mirle and Lelon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mirle Automation Corp and Lelon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lelon Electronics Corp and Mirle Automation 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 Mirle Automation Corp are associated (or correlated) with Lelon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lelon Electronics Corp has no effect on the direction of Mirle Automation i.e., Mirle Automation and Lelon Electronics go up and down completely randomly.

Pair Corralation between Mirle Automation and Lelon Electronics

Assuming the 90 days trading horizon Mirle Automation is expected to generate 2.46 times less return on investment than Lelon Electronics. But when comparing it to its historical volatility, Mirle Automation Corp is 1.02 times less risky than Lelon Electronics. It trades about 0.03 of its potential returns per unit of risk. Lelon Electronics Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  7,470  in Lelon Electronics Corp on October 9, 2024 and sell it today you would earn a total of  750.00  from holding Lelon Electronics Corp or generate 10.04% return on investment over 90 days.

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

Mirle Automation Corp  vs.  Lelon Electronics Corp

Mirle Automation Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mirle Automation Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mirle Automation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lelon Electronics Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lelon Electronics Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lelon Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mirle Automation and Lelon Electronics

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

The idea behind Mirle Automation Corp and Lelon Electronics Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.