Correlation Between Compal Electronics and Fu Burg
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Fu Burg 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 Fu Burg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Electronics and Fu Burg Industrial, you can compare the effects of market volatilities on Compal Electronics and Fu Burg 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 Fu Burg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Fu Burg.
Diversification Opportunities for Compal Electronics and Fu Burg
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compal and 8929 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Fu Burg Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fu Burg 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 Fu Burg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fu Burg Industrial has no effect on the direction of Compal Electronics i.e., Compal Electronics and Fu Burg go up and down completely randomly.
Pair Corralation between Compal Electronics and Fu Burg
Assuming the 90 days trading horizon Compal Electronics is expected to generate 0.88 times more return on investment than Fu Burg. However, Compal Electronics is 1.14 times less risky than Fu Burg. It trades about 0.06 of its potential returns per unit of risk. Fu Burg Industrial is currently generating about 0.03 per unit of risk. If you would invest 2,320 in Compal Electronics on October 11, 2024 and sell it today you would earn a total of 1,405 from holding Compal Electronics or generate 60.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Electronics vs. Fu Burg Industrial
Performance |
| Timeline |
| Compal Electronics |
| Fu Burg Industrial |
Compal Electronics and Fu Burg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Fu Burg
The main advantage of trading using opposite Compal Electronics and Fu Burg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Fu Burg 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 Fu Burg will offset losses from the drop in Fu Burg's long position.| Compal Electronics vs. Holy Stone Enterprise | Compal Electronics vs. Walsin Technology Corp | Compal Electronics vs. Yageo Corp | Compal Electronics vs. HannStar Board Corp |
| Fu Burg vs. Simple Mart Retail | Fu Burg vs. Elan Microelectronics Corp | Fu Burg vs. Compal Electronics | Fu Burg vs. U Ming Marine Transport |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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