Correlation Between Realtek Semiconductor and Leatec Fine

Can any of the company-specific risk be diversified away by investing in both Realtek Semiconductor and Leatec Fine 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 Realtek Semiconductor and Leatec Fine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Realtek Semiconductor Corp and Leatec Fine Ceramics, you can compare the effects of market volatilities on Realtek Semiconductor and Leatec Fine 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 Realtek Semiconductor with a short position of Leatec Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realtek Semiconductor and Leatec Fine.

Diversification Opportunities for Realtek Semiconductor and Leatec Fine

0.57

Correlation Coefficient

Realtek Semiconductor  Leatec Fine

Very weak diversification

The 3 months correlation between Realtek and Leatec is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Realtek Semiconductor Corp and Leatec Fine Ceramics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leatec Fine Ceramics and Realtek Semiconductor 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 Realtek Semiconductor Corp are associated (or correlated) with Leatec Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leatec Fine Ceramics has no effect on the direction of Realtek Semiconductor i.e., Realtek Semiconductor and Leatec Fine go up and down completely randomly.

Pair Corralation between Realtek Semiconductor and Leatec Fine

Assuming the 90 days trading horizon Realtek Semiconductor is expected to generate 1.92 times less return on investment than Leatec Fine. But when comparing it to its historical volatility, Realtek Semiconductor Corp is 1.62 times less risky than Leatec Fine. It trades about 0.15 of its potential returns per unit of risk. Leatec Fine Ceramics is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,620  in Leatec Fine Ceramics on April 21, 2025 and sell it today you would earn a total of  500.00  from holding Leatec Fine Ceramics or generate 30.86% return on investment over 90 days.

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

Realtek Semiconductor Corp  vs.  Leatec Fine Ceramics

Realtek Semiconductor

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Realtek Semiconductor Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Realtek Semiconductor showed solid returns over the last few months and may actually be approaching a breakup point.

Leatec Fine Ceramics

Risk-Adjusted Performance

Good

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

Pair Trading with Realtek Semiconductor and Leatec Fine

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

The idea behind Realtek Semiconductor Corp and Leatec Fine Ceramics 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 Transaction History module to view history of all your transactions and understand their impact on performance.