Correlation Between Wha Yu and Leader Electronics

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

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

Diversification Opportunities for Wha Yu and Leader Electronics

-0.39

Correlation Coefficient

Wha Yu  Leader Electronics

Very good diversification

The 3 months correlation between Wha and Leader is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wha Yu Industrial and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics and Wha Yu 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 Wha Yu Industrial are associated (or correlated) with Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of Wha Yu i.e., Wha Yu and Leader Electronics go up and down completely randomly.

Pair Corralation between Wha Yu and Leader Electronics

Assuming the 90 days trading horizon Wha Yu is expected to generate 3.81 times less return on investment than Leader Electronics. But when comparing it to its historical volatility, Wha Yu Industrial is 1.53 times less risky than Leader Electronics. It trades about 0.02 of its potential returns per unit of risk. Leader Electronics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  972.00  in Leader Electronics on October 7, 2024 and sell it today you would earn a total of  618.00  from holding Leader Electronics or generate 63.58% return on investment over 90 days.

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

Wha Yu Industrial  vs.  Leader Electronics

Wha Yu Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wha Yu Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Wha Yu may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Leader Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leader Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Wha Yu and Leader Electronics

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

The idea behind Wha Yu Industrial and Leader 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.