Correlation Between Allied Circuit and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Allied Circuit 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 Allied Circuit and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Circuit Co and Compal Electronics, you can compare the effects of market volatilities on Allied Circuit 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 Allied Circuit with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Circuit and Compal Electronics.
Diversification Opportunities for Allied Circuit and Compal Electronics
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Allied and Compal is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Allied Circuit Co and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Allied Circuit 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 Allied Circuit 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 Allied Circuit i.e., Allied Circuit and Compal Electronics go up and down completely randomly.
Pair Corralation between Allied Circuit and Compal Electronics
Assuming the 90 days trading horizon Allied Circuit Co is expected to under-perform the Compal Electronics. In addition to that, Allied Circuit is 1.46 times more volatile than Compal Electronics. It trades about -0.05 of its total potential returns per unit of risk. Compal Electronics is currently generating about -0.06 per unit of volatility. If you would invest 3,810 in Compal Electronics on September 15, 2024 and sell it today you would lose (70.00) from holding Compal Electronics or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Circuit Co vs. Compal Electronics
Performance |
| Timeline |
| Allied Circuit |
| Compal Electronics |
Allied Circuit and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Circuit and Compal Electronics
The main advantage of trading using opposite Allied Circuit and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Circuit 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.| Allied Circuit vs. Compal Electronics | Allied Circuit vs. Bright Led Electronics | Allied Circuit vs. Asmedia Technology | Allied Circuit vs. Ligitek Electronics Co |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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