Correlation Between Compal Electronics and Asustek Computer
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Asustek 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 Asustek 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 Asustek Computer, you can compare the effects of market volatilities on Compal Electronics and Asustek 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 Asustek Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Asustek Computer.
Diversification Opportunities for Compal Electronics and Asustek Computer
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Compal and Asustek is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Asustek Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asustek 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 Asustek Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asustek Computer has no effect on the direction of Compal Electronics i.e., Compal Electronics and Asustek Computer go up and down completely randomly.
Pair Corralation between Compal Electronics and Asustek Computer
Assuming the 90 days trading horizon Compal Electronics is expected to under-perform the Asustek Computer. In addition to that, Compal Electronics is 1.24 times more volatile than Asustek Computer. It trades about -0.04 of its total potential returns per unit of risk. Asustek Computer is currently generating about 0.0 per unit of volatility. If you would invest 60,200 in Asustek Computer on October 20, 2024 and sell it today you would lose (200.00) from holding Asustek Computer or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Compal Electronics vs. Asustek Computer
Performance |
| Timeline |
| Compal Electronics |
| Asustek Computer |
Compal Electronics and Asustek Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Asustek Computer
The main advantage of trading using opposite Compal Electronics and Asustek Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Asustek 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 Asustek Computer will offset losses from the drop in Asustek Computer's long position.| Compal Electronics vs. ASRock Inc | Compal Electronics vs. FIC Global | Compal Electronics vs. In Win Development | Compal Electronics vs. Getac Technology Corp |
| Asustek Computer vs. Quanta Computer | Asustek Computer vs. Acer Inc | Asustek Computer vs. United Microelectronics | Asustek Computer vs. Compal Electronics |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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