Correlation Between Ko Ja and Leadtek Research

Can any of the company-specific risk be diversified away by investing in both Ko Ja and Leadtek Research 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 Ko Ja and Leadtek Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ko Ja Cayman and Leadtek Research, you can compare the effects of market volatilities on Ko Ja and Leadtek Research 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 Ko Ja with a short position of Leadtek Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ko Ja and Leadtek Research.

Diversification Opportunities for Ko Ja and Leadtek Research

0.52

Correlation Coefficient

Ko Ja  Leadtek Research

Very weak diversification

The 3 months correlation between 5215 and Leadtek is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Ko Ja Cayman and Leadtek Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leadtek Research and Ko Ja 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 Ko Ja Cayman are associated (or correlated) with Leadtek Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leadtek Research has no effect on the direction of Ko Ja i.e., Ko Ja and Leadtek Research go up and down completely randomly.

Pair Corralation between Ko Ja and Leadtek Research

Assuming the 90 days trading horizon Ko Ja is expected to generate 10.54 times less return on investment than Leadtek Research. But when comparing it to its historical volatility, Ko Ja Cayman is 1.76 times less risky than Leadtek Research. It trades about 0.01 of its potential returns per unit of risk. Leadtek Research is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,420  in Leadtek Research on September 5, 2024 and sell it today you would earn a total of  3,780  from holding Leadtek Research or generate 85.52% return on investment over 90 days.

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

Ko Ja Cayman  vs.  Leadtek Research

Ko Ja Cayman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ko Ja Cayman has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Ko Ja is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Leadtek Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leadtek Research has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Leadtek Research is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ko Ja and Leadtek Research

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

The idea behind Ko Ja Cayman and Leadtek Research 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.