Correlation Between Ebro Foods and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Ebro Foods and Compal 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 Ebro Foods and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ebro Foods and Compal Electronics GDR, you can compare the effects of market volatilities on Ebro Foods and Compal 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 Ebro Foods with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebro Foods and Compal Electronics.
Diversification Opportunities for Ebro Foods and Compal Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ebro and Compal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods and Compal Electronics GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics GDR and Ebro Foods 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 Ebro Foods are associated (or correlated) with Compal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Electronics GDR has no effect on the direction of Ebro Foods i.e., Ebro Foods and Compal Electronics go up and down completely randomly.
Pair Corralation between Ebro Foods and Compal Electronics
Assuming the 90 days trading horizon Ebro Foods is expected to generate 1.77 times less return on investment than Compal Electronics. But when comparing it to its historical volatility, Ebro Foods is 2.63 times less risky than Compal Electronics. It trades about 0.02 of its potential returns per unit of risk. Compal Electronics GDR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Compal Electronics GDR on October 26, 2024 and sell it today you would earn a total of 14.00 from holding Compal Electronics GDR or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ebro Foods vs. Compal Electronics GDR
Performance |
| Timeline |
| Ebro Foods |
| Compal Electronics GDR |
Ebro Foods and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ebro Foods and Compal Electronics
The main advantage of trading using opposite Ebro Foods and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods position performs unexpectedly, Compal 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 Compal Electronics will offset losses from the drop in Compal Electronics' long position.| Ebro Foods vs. Concurrent Technologies Plc | Ebro Foods vs. Check Point Software | Ebro Foods vs. Beowulf Mining | Ebro Foods vs. Eneraqua Technologies PLC |
| Compal Electronics vs. CAP LEASE AVIATION | Compal Electronics vs. Vietnam Enterprise Investments | Compal Electronics vs. JD Sports Fashion | Compal Electronics vs. Canadian General Investments |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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