Correlation Between Leyard Optoelectronic and Thunder Software

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

By analyzing existing cross correlation between Leyard Optoelectronic and Thunder Software Technology, you can compare the effects of market volatilities on Leyard Optoelectronic and Thunder Software 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 Leyard Optoelectronic with a short position of Thunder Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leyard Optoelectronic and Thunder Software.

Diversification Opportunities for Leyard Optoelectronic and Thunder Software

0.57

Correlation Coefficient

Leyard Optoelectronic  Thunder Software

Very weak diversification

The 3 months correlation between Leyard and Thunder is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Leyard Optoelectronic and Thunder Software Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Software Tec and Leyard Optoelectronic 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 Leyard Optoelectronic are associated (or correlated) with Thunder Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Software Tec has no effect on the direction of Leyard Optoelectronic i.e., Leyard Optoelectronic and Thunder Software go up and down completely randomly.

Pair Corralation between Leyard Optoelectronic and Thunder Software

Assuming the 90 days trading horizon Leyard Optoelectronic is expected to generate 1.58 times more return on investment than Thunder Software. However, Leyard Optoelectronic is 1.58 times more volatile than Thunder Software Technology. It trades about 0.12 of its potential returns per unit of risk. Thunder Software Technology is currently generating about 0.03 per unit of risk. If you would invest  534.00  in Leyard Optoelectronic on October 25, 2024 and sell it today you would earn a total of  137.00  from holding Leyard Optoelectronic or generate 25.66% return on investment over 90 days.

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

Leyard Optoelectronic  vs.  Thunder Software Technology

Leyard Optoelectronic

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leyard Optoelectronic are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Leyard Optoelectronic sustained solid returns over the last few months and may actually be approaching a breakup point.

Thunder Software Tec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thunder Software Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thunder Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Leyard Optoelectronic and Thunder Software

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

The idea behind Leyard Optoelectronic and Thunder Software Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..