Correlation Between Leader Electronics and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Leader Electronics and Chia Chang 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 Chia Chang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leader Electronics and Chia Chang Co, you can compare the effects of market volatilities on Leader Electronics and Chia Chang 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 Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leader Electronics and Chia Chang.
Diversification Opportunities for Leader Electronics and Chia Chang
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leader and Chia is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Leader Electronics and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang 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 Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Leader Electronics i.e., Leader Electronics and Chia Chang go up and down completely randomly.
Pair Corralation between Leader Electronics and Chia Chang
Assuming the 90 days trading horizon Leader Electronics is expected to under-perform the Chia Chang. In addition to that, Leader Electronics is 2.9 times more volatile than Chia Chang Co. It trades about -0.21 of its total potential returns per unit of risk. Chia Chang Co is currently generating about 0.02 per unit of volatility. If you would invest 4,115 in Chia Chang Co on December 29, 2024 and sell it today you would earn a total of 25.00 from holding Chia Chang Co or generate 0.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.25% |
Values | Daily Returns |
Leader Electronics vs. Chia Chang Co
Performance |
Timeline |
Leader Electronics |
Chia Chang |
Leader Electronics and Chia Chang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Leader Electronics and Chia Chang
The main advantage of trading using opposite Leader Electronics and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leader Electronics position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang's long position.Leader Electronics vs. Altek Corp | Leader Electronics vs. Promise Technology | Leader Electronics vs. Edom Technology Co | Leader Electronics vs. Spirox Corp |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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