Correlation Between Compal Broadband and Higher Way
Can any of the company-specific risk be diversified away by investing in both Compal Broadband and Higher Way 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 Higher Way 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 Higher Way Electronic, you can compare the effects of market volatilities on Compal Broadband and Higher Way 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 Higher Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Broadband and Higher Way.
Diversification Opportunities for Compal Broadband and Higher Way
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Compal and Higher is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Compal Broadband Networks and Higher Way Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Higher Way Electronic 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 Higher Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Higher Way Electronic has no effect on the direction of Compal Broadband i.e., Compal Broadband and Higher Way go up and down completely randomly.
Pair Corralation between Compal Broadband and Higher Way
Assuming the 90 days trading horizon Compal Broadband Networks is expected to generate 0.55 times more return on investment than Higher Way. However, Compal Broadband Networks is 1.82 times less risky than Higher Way. It trades about -0.23 of its potential returns per unit of risk. Higher Way Electronic is currently generating about -0.45 per unit of risk. If you would invest 2,410 in Compal Broadband Networks on October 24, 2024 and sell it today you would lose (150.00) from holding Compal Broadband Networks or give up 6.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compal Broadband Networks vs. Higher Way Electronic
Performance |
| Timeline |
| Compal Broadband Networks |
| Higher Way Electronic |
Compal Broadband and Higher Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Broadband and Higher Way
The main advantage of trading using opposite Compal Broadband and Higher Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Broadband position performs unexpectedly, Higher Way 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 Higher Way will offset losses from the drop in Higher Way's long position.| Compal Broadband vs. Loop Telecommunication International | Compal Broadband vs. Arcadyan Technology Corp | Compal Broadband vs. Hitron Technologies |
| Higher Way vs. Microelectronics Technology | Higher Way vs. Jetwell Computer Co | Higher Way vs. Yuan High Tech Development | Higher Way vs. Emerging Display Technologies |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |