Correlation Between Compal Broadband and Central Reinsurance
Can any of the company-specific risk be diversified away by investing in both Compal Broadband and Central Reinsurance 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 Central Reinsurance 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 Central Reinsurance Corp, you can compare the effects of market volatilities on Compal Broadband and Central Reinsurance 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 Central Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Broadband and Central Reinsurance.
Diversification Opportunities for Compal Broadband and Central Reinsurance
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Compal and Central is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Compal Broadband Networks and Central Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Reinsurance Corp 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 Central Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Reinsurance Corp has no effect on the direction of Compal Broadband i.e., Compal Broadband and Central Reinsurance go up and down completely randomly.
Pair Corralation between Compal Broadband and Central Reinsurance
Assuming the 90 days trading horizon Compal Broadband Networks is expected to generate 1.62 times more return on investment than Central Reinsurance. However, Compal Broadband is 1.62 times more volatile than Central Reinsurance Corp. It trades about 0.02 of its potential returns per unit of risk. Central Reinsurance Corp is currently generating about 0.03 per unit of risk. If you would invest 2,830 in Compal Broadband Networks on August 26, 2024 and sell it today you would earn a total of 190.00 from holding Compal Broadband Networks or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Broadband Networks vs. Central Reinsurance Corp
Performance |
| Timeline |
| Compal Broadband Networks |
| Central Reinsurance Corp |
Compal Broadband and Central Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Broadband and Central Reinsurance
The main advantage of trading using opposite Compal Broadband and Central Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Broadband position performs unexpectedly, Central Reinsurance 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 Central Reinsurance will offset losses from the drop in Central Reinsurance's long position.| Compal Broadband vs. Accton Technology Corp | Compal Broadband vs. Arcadyan Technology Corp | Compal Broadband vs. Advanced Ceramic X | Compal Broadband vs. Gemtek Technology Co |
| Central Reinsurance vs. Ma Kuang Healthcare | Central Reinsurance vs. U Ming Marine Transport | Central Reinsurance vs. Chi Hua Fitness | Central Reinsurance vs. First Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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