Correlation Between Compal Electronics and Micro Star
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Micro Star 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 Micro Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Electronics and Micro Star International Co, you can compare the effects of market volatilities on Compal Electronics and Micro Star 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 Micro Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Micro Star.
Diversification Opportunities for Compal Electronics and Micro Star
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compal and Micro is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Micro Star International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Star Internati 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 Micro Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Star Internati has no effect on the direction of Compal Electronics i.e., Compal Electronics and Micro Star go up and down completely randomly.
Pair Corralation between Compal Electronics and Micro Star
Assuming the 90 days trading horizon Compal Electronics is expected to generate 0.95 times more return on investment than Micro Star. However, Compal Electronics is 1.05 times less risky than Micro Star. It trades about 0.13 of its potential returns per unit of risk. Micro Star International Co is currently generating about -0.16 per unit of risk. If you would invest 3,600 in Compal Electronics on August 30, 2024 and sell it today you would earn a total of 160.00 from holding Compal Electronics or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compal Electronics vs. Micro Star International Co
Performance |
| Timeline |
| Compal Electronics |
| Micro Star Internati |
Compal Electronics and Micro Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Micro Star
The main advantage of trading using opposite Compal Electronics and Micro Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Micro Star 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 Micro Star will offset losses from the drop in Micro Star's long position.| Compal Electronics vs. Quanta Computer | Compal Electronics vs. Inventec Corp | Compal Electronics vs. Asustek Computer | Compal Electronics vs. Acer Inc |
| Micro Star vs. Gigabyte Technology Co | Micro Star vs. Asustek Computer | Micro Star vs. Quanta Computer | Micro Star 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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