Correlation Between Emerging Display and Compal Broadband
Can any of the company-specific risk be diversified away by investing in both Emerging Display and Compal Broadband 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 Emerging Display and Compal Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Display Technologies and Compal Broadband Networks, you can compare the effects of market volatilities on Emerging Display and Compal Broadband 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 Emerging Display with a short position of Compal Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Display and Compal Broadband.
Diversification Opportunities for Emerging Display and Compal Broadband
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Compal is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Display Technologies and Compal Broadband Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Broadband Networks and Emerging Display 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 Emerging Display Technologies are associated (or correlated) with Compal Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Broadband Networks has no effect on the direction of Emerging Display i.e., Emerging Display and Compal Broadband go up and down completely randomly.
Pair Corralation between Emerging Display and Compal Broadband
Assuming the 90 days trading horizon Emerging Display Technologies is expected to under-perform the Compal Broadband. But the stock apears to be less risky and, when comparing its historical volatility, Emerging Display Technologies is 1.5 times less risky than Compal Broadband. The stock trades about -0.08 of its potential returns per unit of risk. The Compal Broadband Networks is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,970 in Compal Broadband Networks on September 3, 2024 and sell it today you would lose (215.00) from holding Compal Broadband Networks or give up 7.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Display Technologies vs. Compal Broadband Networks
Performance |
| Timeline |
| Emerging Display Tec |
| Compal Broadband Networks |
Emerging Display and Compal Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Display and Compal Broadband
The main advantage of trading using opposite Emerging Display and Compal Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Display position performs unexpectedly, Compal Broadband 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 Broadband will offset losses from the drop in Compal Broadband's long position.| Emerging Display vs. Taiwan Semiconductor Manufacturing | Emerging Display vs. Yang Ming Marine | Emerging Display vs. ASE Industrial Holding | Emerging Display vs. AU Optronics |
| Compal Broadband vs. Accton Technology Corp | Compal Broadband vs. Wistron NeWeb Corp | Compal Broadband vs. Alpha Networks | Compal Broadband vs. Gemtek Technology Co |
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 Stocks Directory module to find actively traded stocks across global markets.
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