Correlation Between Compal Electronics and Aerospace Industrial
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Aerospace Industrial 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 Aerospace Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Electronics and Aerospace Industrial Development, you can compare the effects of market volatilities on Compal Electronics and Aerospace Industrial 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 Aerospace Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Aerospace Industrial.
Diversification Opportunities for Compal Electronics and Aerospace Industrial
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compal and Aerospace is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Aerospace Industrial Developme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerospace Industrial 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 Aerospace Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerospace Industrial has no effect on the direction of Compal Electronics i.e., Compal Electronics and Aerospace Industrial go up and down completely randomly.
Pair Corralation between Compal Electronics and Aerospace Industrial
Assuming the 90 days trading horizon Compal Electronics is expected to generate 1.06 times more return on investment than Aerospace Industrial. However, Compal Electronics is 1.06 times more volatile than Aerospace Industrial Development. It trades about 0.02 of its potential returns per unit of risk. Aerospace Industrial Development is currently generating about -0.08 per unit of risk. If you would invest 3,585 in Compal Electronics on October 13, 2024 and sell it today you would earn a total of 65.00 from holding Compal Electronics or generate 1.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Electronics vs. Aerospace Industrial Developme
Performance |
| Timeline |
| Compal Electronics |
| Aerospace Industrial |
Compal Electronics and Aerospace Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Aerospace Industrial
The main advantage of trading using opposite Compal Electronics and Aerospace Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Aerospace Industrial 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 Aerospace Industrial will offset losses from the drop in Aerospace Industrial's long position.| Compal Electronics vs. Quanta Computer | Compal Electronics vs. Inventec Corp | Compal Electronics vs. Asustek Computer | Compal Electronics vs. Acer Inc |
| Aerospace Industrial vs. CSBC Corp Taiwan | Aerospace Industrial vs. Eva Airways Corp | Aerospace Industrial vs. Taiwan High Speed | Aerospace Industrial vs. China Airlines |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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