Correlation Between Accton Technology and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Accton Technology and Compal Electronics 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 Accton Technology and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Accton Technology Corp and Compal Electronics, you can compare the effects of market volatilities on Accton Technology and Compal Electronics 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 Accton Technology with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accton Technology and Compal Electronics.
Diversification Opportunities for Accton Technology and Compal Electronics
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Accton and Compal is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Accton Technology Corp and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Accton Technology 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 Accton Technology Corp are associated (or correlated) with Compal Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Electronics has no effect on the direction of Accton Technology i.e., Accton Technology and Compal Electronics go up and down completely randomly.
Pair Corralation between Accton Technology and Compal Electronics
Assuming the 90 days trading horizon Accton Technology Corp is expected to generate 1.39 times more return on investment than Compal Electronics. However, Accton Technology is 1.39 times more volatile than Compal Electronics. It trades about 0.09 of its potential returns per unit of risk. Compal Electronics is currently generating about 0.06 per unit of risk. If you would invest 24,329 in Accton Technology Corp on August 31, 2024 and sell it today you would earn a total of 40,371 from holding Accton Technology Corp or generate 165.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Accton Technology Corp vs. Compal Electronics
Performance |
| Timeline |
| Accton Technology Corp |
| Compal Electronics |
Accton Technology and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Accton Technology and Compal Electronics
The main advantage of trading using opposite Accton Technology and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Accton Technology position performs unexpectedly, Compal Electronics 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 Compal Electronics will offset losses from the drop in Compal Electronics' long position.| Accton Technology vs. D Link Corp | Accton Technology vs. Realtek Semiconductor Corp | Accton Technology vs. Winbond Electronics Corp | Accton Technology vs. Compal Electronics |
| Compal Electronics vs. Quanta Computer | Compal Electronics vs. Inventec Corp | Compal Electronics vs. Asustek Computer | Compal Electronics vs. Acer Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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