Correlation Between Lealea Enterprise and Yeong Guan

Can any of the company-specific risk be diversified away by investing in both Lealea Enterprise and Yeong Guan 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 Lealea Enterprise and Yeong Guan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lealea Enterprise Co and Yeong Guan Energy, you can compare the effects of market volatilities on Lealea Enterprise and Yeong Guan 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 Lealea Enterprise with a short position of Yeong Guan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lealea Enterprise and Yeong Guan.

Diversification Opportunities for Lealea Enterprise and Yeong Guan

0.5

Correlation Coefficient

Lealea Enterprise  Yeong Guan

Very weak diversification

The 3 months correlation between Lealea and Yeong is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Lealea Enterprise Co and Yeong Guan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeong Guan Energy and Lealea Enterprise 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 Lealea Enterprise Co are associated (or correlated) with Yeong Guan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeong Guan Energy has no effect on the direction of Lealea Enterprise i.e., Lealea Enterprise and Yeong Guan go up and down completely randomly.

Pair Corralation between Lealea Enterprise and Yeong Guan

Assuming the 90 days trading horizon Lealea Enterprise Co is expected to generate 0.59 times more return on investment than Yeong Guan. However, Lealea Enterprise Co is 1.7 times less risky than Yeong Guan. It trades about -0.03 of its potential returns per unit of risk. Yeong Guan Energy is currently generating about -0.05 per unit of risk. If you would invest  1,045  in Lealea Enterprise Co on September 12, 2024 and sell it today you would lose (120.00) from holding Lealea Enterprise Co or give up 11.48% of portfolio value over 90 days.

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

Lealea Enterprise Co  vs.  Yeong Guan Energy

Lealea Enterprise

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lealea Enterprise Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lealea Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yeong Guan Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yeong Guan Energy 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.

Pair Trading with Lealea Enterprise and Yeong Guan

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

The idea behind Lealea Enterprise Co and Yeong Guan Energy 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.