Correlation Between Compal Broadband and Hitron Technologies
Can any of the company-specific risk be diversified away by investing in both Compal Broadband and Hitron Technologies 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 Broadband and Hitron Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Broadband Networks and Hitron Technologies, you can compare the effects of market volatilities on Compal Broadband and Hitron Technologies 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 Broadband with a short position of Hitron Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Broadband and Hitron Technologies.
Diversification Opportunities for Compal Broadband and Hitron Technologies
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Compal and Hitron is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Compal Broadband Networks and Hitron Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hitron Technologies and Compal Broadband 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 Broadband Networks are associated (or correlated) with Hitron Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hitron Technologies has no effect on the direction of Compal Broadband i.e., Compal Broadband and Hitron Technologies go up and down completely randomly.
Pair Corralation between Compal Broadband and Hitron Technologies
Assuming the 90 days trading horizon Compal Broadband Networks is expected to generate 1.04 times more return on investment than Hitron Technologies. However, Compal Broadband is 1.04 times more volatile than Hitron Technologies. It trades about 0.16 of its potential returns per unit of risk. Hitron Technologies is currently generating about 0.16 per unit of risk. If you would invest 2,450 in Compal Broadband Networks on August 30, 2024 and sell it today you would earn a total of 315.00 from holding Compal Broadband Networks or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Broadband Networks vs. Hitron Technologies
Performance |
| Timeline |
| Compal Broadband Networks |
| Hitron Technologies |
Compal Broadband and Hitron Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Broadband and Hitron Technologies
The main advantage of trading using opposite Compal Broadband and Hitron Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Broadband position performs unexpectedly, Hitron Technologies 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 Hitron Technologies will offset losses from the drop in Hitron Technologies' long position.| Compal Broadband vs. Accton Technology Corp | Compal Broadband vs. Wistron NeWeb Corp | Compal Broadband vs. Arcadyan Technology Corp | Compal Broadband vs. Sercomm Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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