Correlation Between Flytech Technology and Ligitek Electronics

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

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

Diversification Opportunities for Flytech Technology and Ligitek Electronics

0.65

Correlation Coefficient

Flytech Technology  Ligitek Electronics

Poor diversification

The 3 months correlation between Flytech and Ligitek is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Flytech Technology Co and Ligitek Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ligitek Electronics and Flytech Technology 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 Flytech Technology Co are associated (or correlated) with Ligitek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ligitek Electronics has no effect on the direction of Flytech Technology i.e., Flytech Technology and Ligitek Electronics go up and down completely randomly.

Pair Corralation between Flytech Technology and Ligitek Electronics

Assuming the 90 days trading horizon Flytech Technology Co is expected to generate 0.29 times more return on investment than Ligitek Electronics. However, Flytech Technology Co is 3.45 times less risky than Ligitek Electronics. It trades about 0.29 of its potential returns per unit of risk. Ligitek Electronics Co is currently generating about 0.06 per unit of risk. If you would invest  8,490  in Flytech Technology Co on October 16, 2024 and sell it today you would earn a total of  590.00  from holding Flytech Technology Co or generate 6.95% return on investment over 90 days.

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

Flytech Technology Co  vs.  Ligitek Electronics Co

Flytech Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flytech Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Flytech Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ligitek Electronics

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ligitek Electronics Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ligitek Electronics 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 Flytech Technology and Ligitek Electronics

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

The idea behind Flytech Technology Co and Ligitek Electronics Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.