Correlation Between Leader Electronics and Kworld Computer
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Kworld Computer 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 Leader Electronics and Kworld Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Kworld Computer Co, you can compare the effects of market volatilities on Leader Electronics and Kworld Computer 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 Leader Electronics with a short position of Kworld Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Kworld Computer.
Diversification Opportunities for Leader Electronics and Kworld Computer
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leader and Kworld is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Kworld Computer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kworld Computer and Leader 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 Leader Electronics are associated (or correlated) with Kworld Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kworld Computer has no effect on the direction of Leader Electronics i.e., Leader Electronics and Kworld Computer go up and down completely randomly.
Pair Corralation between Leader Electronics and Kworld Computer
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Kworld Computer. But the stock apears to be less risky and, when comparing its historical volatility, Leader Electronics is 1.27 times less risky than Kworld Computer. The stock trades about -0.14 of its potential returns per unit of risk. The Kworld Computer Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,675 in Kworld Computer Co on September 15, 2024 and sell it today you would lose (335.00) from holding Kworld Computer Co or give up 9.12% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Leader Electronics vs. Kworld Computer Co
Performance |
Timeline |
Leader Electronics |
Kworld Computer |
Leader Electronics and Kworld Computer Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leader Electronics and Kworld Computer
The main advantage of trading using opposite Leader Electronics and Kworld Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Kworld Computer 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 Kworld Computer will offset losses from the drop in Kworld Computer's long position.Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics vs. China Airlines |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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