Correlation Between Sporton International and Landis Taipei

Can any of the company-specific risk be diversified away by investing in both Sporton International and Landis Taipei 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 Sporton International and Landis Taipei into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sporton International and Landis Taipei Hotel, you can compare the effects of market volatilities on Sporton International and Landis Taipei 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 Sporton International with a short position of Landis Taipei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sporton International and Landis Taipei.

Diversification Opportunities for Sporton International and Landis Taipei

0.28

Correlation Coefficient

Sporton International  Landis Taipei

Modest diversification

The 3 months correlation between Sporton and Landis is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sporton International and Landis Taipei Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Landis Taipei Hotel and Sporton International 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 Sporton International are associated (or correlated) with Landis Taipei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Landis Taipei Hotel has no effect on the direction of Sporton International i.e., Sporton International and Landis Taipei go up and down completely randomly.

Pair Corralation between Sporton International and Landis Taipei

Assuming the 90 days trading horizon Sporton International is expected to under-perform the Landis Taipei. But the stock apears to be less risky and, when comparing its historical volatility, Sporton International is 2.23 times less risky than Landis Taipei. The stock trades about -0.12 of its potential returns per unit of risk. The Landis Taipei Hotel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,870  in Landis Taipei Hotel on October 23, 2024 and sell it today you would earn a total of  100.00  from holding Landis Taipei Hotel or generate 5.35% return on investment over 90 days.

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

Sporton International  vs.  Landis Taipei Hotel

Sporton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sporton International 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.

Landis Taipei Hotel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Landis Taipei Hotel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Landis Taipei may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sporton International and Landis Taipei

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

The idea behind Sporton International and Landis Taipei Hotel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.