Correlation Between Leatec Fine and Data International

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

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

Diversification Opportunities for Leatec Fine and Data International

0.16

Correlation Coefficient

Leatec Fine  Data International

Average diversification

The 3 months correlation between Leatec and Data is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Leatec Fine Ceramics and Data International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data International and Leatec Fine 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 Leatec Fine Ceramics are associated (or correlated) with Data International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data International has no effect on the direction of Leatec Fine i.e., Leatec Fine and Data International go up and down completely randomly.

Pair Corralation between Leatec Fine and Data International

Assuming the 90 days trading horizon Leatec Fine is expected to generate 4.64 times less return on investment than Data International. But when comparing it to its historical volatility, Leatec Fine Ceramics is 1.42 times less risky than Data International. It trades about 0.03 of its potential returns per unit of risk. Data International Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,818  in Data International Co on January 31, 2024 and sell it today you would earn a total of  10,182  from holding Data International Co or generate 266.68% return on investment over 90 days.

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

Leatec Fine Ceramics  vs.  Data International Co

Leatec Fine Ceramics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leatec Fine Ceramics 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.

Data International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Data International Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Data International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Leatec Fine and Data International

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

The idea behind Leatec Fine Ceramics and Data International 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.