Correlation Between Greatek Electronics and Lelon Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Lelon 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 Greatek Electronics and Lelon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Lelon Electronics Corp, you can compare the effects of market volatilities on Greatek Electronics and Lelon 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 Greatek Electronics with a short position of Lelon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Lelon Electronics.

Diversification Opportunities for Greatek Electronics and Lelon Electronics

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Greatek and Lelon is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Lelon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lelon Electronics Corp and Greatek Electronics 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 Greatek Electronics are associated (or correlated) with Lelon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lelon Electronics Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Lelon Electronics go up and down completely randomly.

Pair Corralation between Greatek Electronics and Lelon Electronics

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 2.8 times less return on investment than Lelon Electronics. But when comparing it to its historical volatility, Greatek Electronics is 1.46 times less risky than Lelon Electronics. It trades about 0.03 of its potential returns per unit of risk. Lelon Electronics Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,096  in Lelon Electronics Corp on September 24, 2024 and sell it today you would earn a total of  3,004  from holding Lelon Electronics Corp or generate 58.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Greatek Electronics  vs.  Lelon Electronics Corp

 Performance 
       Timeline  
Greatek Electronics 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lelon Electronics Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Lelon Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Greatek Electronics and Lelon Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Greatek Electronics and Lelon Electronics

The main advantage of trading using opposite Greatek Electronics and Lelon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Lelon 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 Lelon Electronics will offset losses from the drop in Lelon Electronics' long position.
The idea behind Greatek Electronics and Lelon Electronics Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals