Correlation Between Ligitek Electronics and Great Computer

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

Diversification Opportunities for Ligitek Electronics and Great Computer

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ligitek and Great is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ligitek Electronics Co and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer and Ligitek 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 Ligitek Electronics Co are associated (or correlated) with Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Ligitek Electronics i.e., Ligitek Electronics and Great Computer go up and down completely randomly.

Pair Corralation between Ligitek Electronics and Great Computer

Assuming the 90 days trading horizon Ligitek Electronics Co is expected to generate 0.98 times more return on investment than Great Computer. However, Ligitek Electronics Co is 1.02 times less risky than Great Computer. It trades about 0.18 of its potential returns per unit of risk. Great Computer is currently generating about 0.08 per unit of risk. If you would invest  2,975  in Ligitek Electronics Co on September 13, 2024 and sell it today you would earn a total of  1,560  from holding Ligitek Electronics Co or generate 52.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ligitek Electronics Co  vs.  Great Computer

 Performance 
       Timeline  
Ligitek Electronics 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ligitek Electronics Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Ligitek Electronics showed solid returns over the last few months and may actually be approaching a breakup point.
Great Computer 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Ligitek Electronics and Great Computer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ligitek Electronics and Great Computer

The main advantage of trading using opposite Ligitek Electronics and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ligitek Electronics position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer's long position.
The idea behind Ligitek Electronics Co and Great Computer 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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