Correlation Between Compeq Manufacturing and New Era
Can any of the company-specific risk be diversified away by investing in both Compeq Manufacturing and New Era 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 Compeq Manufacturing and New Era into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compeq Manufacturing Co and New Era Electronics, you can compare the effects of market volatilities on Compeq Manufacturing and New Era 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 Compeq Manufacturing with a short position of New Era. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compeq Manufacturing and New Era.
Diversification Opportunities for Compeq Manufacturing and New Era
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compeq and New is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Compeq Manufacturing Co and New Era Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Era Electronics and Compeq Manufacturing 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 Compeq Manufacturing Co are associated (or correlated) with New Era. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Era Electronics has no effect on the direction of Compeq Manufacturing i.e., Compeq Manufacturing and New Era go up and down completely randomly.
Pair Corralation between Compeq Manufacturing and New Era
Assuming the 90 days trading horizon Compeq Manufacturing Co is expected to under-perform the New Era. But the stock apears to be less risky and, when comparing its historical volatility, Compeq Manufacturing Co is 2.43 times less risky than New Era. The stock trades about -0.04 of its potential returns per unit of risk. The New Era Electronics is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12,150 in New Era Electronics on September 12, 2024 and sell it today you would earn a total of 50.00 from holding New Era Electronics or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compeq Manufacturing Co vs. New Era Electronics
Performance |
| Timeline |
| Compeq Manufacturing |
| New Era Electronics |
Compeq Manufacturing and New Era Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compeq Manufacturing and New Era
The main advantage of trading using opposite Compeq Manufacturing and New Era positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compeq Manufacturing position performs unexpectedly, New Era 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 New Era will offset losses from the drop in New Era's long position.| Compeq Manufacturing vs. AU Optronics | Compeq Manufacturing vs. Innolux Corp | Compeq Manufacturing vs. Ruentex Development Co | Compeq Manufacturing vs. WiseChip Semiconductor |
| New Era vs. Microtips Technology | New Era vs. Voltronic Power Technology | New Era vs. Asia Metal Industries | New Era vs. China Metal Products |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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