Correlation Between Sunfon Construction and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Sunfon Construction 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 Sunfon Construction and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunfon Construction Co and Compal Electronics, you can compare the effects of market volatilities on Sunfon Construction 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 Sunfon Construction with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunfon Construction and Compal Electronics.
Diversification Opportunities for Sunfon Construction and Compal Electronics
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sunfon and Compal is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sunfon Construction Co and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Sunfon Construction 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 Sunfon Construction Co 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 Sunfon Construction i.e., Sunfon Construction and Compal Electronics go up and down completely randomly.
Pair Corralation between Sunfon Construction and Compal Electronics
Assuming the 90 days trading horizon Sunfon Construction Co is expected to under-perform the Compal Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Sunfon Construction Co is 1.9 times less risky than Compal Electronics. The stock trades about -0.17 of its potential returns per unit of risk. The Compal Electronics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,600 in Compal Electronics on August 30, 2024 and sell it today you would earn a total of 160.00 from holding Compal Electronics or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sunfon Construction Co vs. Compal Electronics
Performance |
| Timeline |
| Sunfon Construction |
| Compal Electronics |
Sunfon Construction and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunfon Construction and Compal Electronics
The main advantage of trading using opposite Sunfon Construction and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunfon Construction 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.| Sunfon Construction vs. Loop Telecommunication International | Sunfon Construction vs. TWOWAY Communications | Sunfon Construction vs. Professional Computer Technology | Sunfon Construction vs. Great Computer |
| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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