Correlation Between ThinTech Materials and Leatec Fine

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

By analyzing existing cross correlation between ThinTech Materials Technology and Leatec Fine Ceramics, you can compare the effects of market volatilities on ThinTech Materials and Leatec Fine 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 ThinTech Materials with a short position of Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of ThinTech Materials and Leatec Fine.

Diversification Opportunities for ThinTech Materials and Leatec Fine

0.27

Correlation Coefficient

ThinTech Materials  Leatec Fine

Modest diversification

The 3 months correlation between ThinTech and Leatec is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding ThinTech Materials Technology and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics and ThinTech Materials 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 ThinTech Materials Technology are associated (or correlated) with Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of ThinTech Materials i.e., ThinTech Materials and Leatec Fine go up and down completely randomly.

Pair Corralation between ThinTech Materials and Leatec Fine

Assuming the 90 days trading horizon ThinTech Materials Technology is expected to generate 1.44 times more return on investment than Leatec Fine. However, ThinTech Materials is 1.44 times more volatile than Leatec Fine Ceramics. It trades about 0.17 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.0 per unit of risk. If you would invest  6,100  in ThinTech Materials Technology on December 5, 2024 and sell it today you would earn a total of  650.00  from holding ThinTech Materials Technology or generate 10.66% return on investment over 90 days.

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

ThinTech Materials Technology  vs.  Leatec Fine Ceramics

ThinTech Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days ThinTech Materials Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Leatec Fine Ceramics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Leatec Fine Ceramics 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with ThinTech Materials and Leatec Fine

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

The idea behind ThinTech Materials Technology and Leatec Fine Ceramics 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.