Correlation Between Compal Electronics and Elitegroup Computer
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Elitegroup 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 Compal Electronics and Elitegroup Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Electronics and Elitegroup Computer Systems, you can compare the effects of market volatilities on Compal Electronics and Elitegroup 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 Compal Electronics with a short position of Elitegroup Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Elitegroup Computer.
Diversification Opportunities for Compal Electronics and Elitegroup Computer
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compal and Elitegroup is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Elitegroup Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elitegroup Computer and Compal 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 Compal Electronics are associated (or correlated) with Elitegroup Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elitegroup Computer has no effect on the direction of Compal Electronics i.e., Compal Electronics and Elitegroup Computer go up and down completely randomly.
Pair Corralation between Compal Electronics and Elitegroup Computer
Assuming the 90 days trading horizon Compal Electronics is expected to under-perform the Elitegroup Computer. In addition to that, Compal Electronics is 1.08 times more volatile than Elitegroup Computer Systems. It trades about -0.1 of its total potential returns per unit of risk. Elitegroup Computer Systems is currently generating about -0.01 per unit of volatility. If you would invest 2,195 in Elitegroup Computer Systems on October 24, 2024 and sell it today you would lose (15.00) from holding Elitegroup Computer Systems or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Electronics vs. Elitegroup Computer Systems
Performance |
| Timeline |
| Compal Electronics |
| Elitegroup Computer |
Compal Electronics and Elitegroup Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Elitegroup Computer
The main advantage of trading using opposite Compal Electronics and Elitegroup Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Elitegroup 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 Elitegroup Computer will offset losses from the drop in Elitegroup Computer's long position.| Compal Electronics vs. Quanta Computer | Compal Electronics vs. Inventec Corp | Compal Electronics vs. Asustek Computer | Compal Electronics vs. Acer Inc |
| Elitegroup Computer vs. Micro Star International Co | Elitegroup Computer vs. Gigabyte Technology Co | Elitegroup Computer vs. Compal Electronics | Elitegroup Computer vs. VIA Technologies |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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