Correlation Between Lelon Electronics and Greatek Electronics

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

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

Diversification Opportunities for Lelon Electronics and Greatek Electronics

0.18

Correlation Coefficient

Lelon Electronics  Greatek Electronics

Average diversification

The 3 months correlation between Lelon and Greatek is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lelon Electronics Corp and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Lelon Electronics 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 Lelon Electronics Corp are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Lelon Electronics i.e., Lelon Electronics and Greatek Electronics go up and down completely randomly.

Pair Corralation between Lelon Electronics and Greatek Electronics

Assuming the 90 days trading horizon Lelon Electronics Corp is expected to generate 2.12 times more return on investment than Greatek Electronics. However, Lelon Electronics is 2.12 times more volatile than Greatek Electronics. It trades about 0.08 of its potential returns per unit of risk. Greatek Electronics is currently generating about 0.0 per unit of risk. If you would invest  7,380  in Lelon Electronics Corp on September 17, 2024 and sell it today you would earn a total of  700.00  from holding Lelon Electronics Corp or generate 9.49% return on investment over 90 days.

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

Lelon Electronics Corp  vs.  Greatek Electronics

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 January 2025.

Greatek Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Lelon Electronics and Greatek Electronics

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

The idea behind Lelon Electronics Corp and Greatek Electronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..