Correlation Between ASRock and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both ASRock 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 ASRock and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASRock Inc and Compal Electronics, you can compare the effects of market volatilities on ASRock 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 ASRock with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASRock and Compal Electronics.
Diversification Opportunities for ASRock and Compal Electronics
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ASRock and Compal is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding ASRock Inc and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and ASRock 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 ASRock Inc 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 ASRock i.e., ASRock and Compal Electronics go up and down completely randomly.
Pair Corralation between ASRock and Compal Electronics
Assuming the 90 days trading horizon ASRock Inc is expected to under-perform the Compal Electronics. In addition to that, ASRock is 1.37 times more volatile than Compal Electronics. It trades about -0.47 of its total potential returns per unit of risk. Compal Electronics is currently generating about -0.23 per unit of volatility. If you would invest 3,920 in Compal Electronics on December 26, 2024 and sell it today you would lose (290.00) from holding Compal Electronics or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASRock Inc vs. Compal Electronics
Performance |
| Timeline |
| ASRock Inc |
| Compal Electronics |
ASRock and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASRock and Compal Electronics
The main advantage of trading using opposite ASRock and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASRock 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.| ASRock vs. Gigabyte Technology Co | ASRock vs. Micro Star International Co | ASRock vs. Asustek Computer | ASRock vs. Kinsus Interconnect Technology |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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