Correlation Between I Jang and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both I Jang 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 I Jang and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between I Jang Industrial and Compal Electronics, you can compare the effects of market volatilities on I Jang 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 I Jang with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Jang and Compal Electronics.
Diversification Opportunities for I Jang and Compal Electronics
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between 8342 and Compal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding I Jang Industrial and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and I Jang 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 I Jang Industrial 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 I Jang i.e., I Jang and Compal Electronics go up and down completely randomly.
Pair Corralation between I Jang and Compal Electronics
Assuming the 90 days trading horizon I Jang Industrial is expected to generate 1.22 times more return on investment than Compal Electronics. However, I Jang is 1.22 times more volatile than Compal Electronics. It trades about 0.05 of its potential returns per unit of risk. Compal Electronics is currently generating about 0.02 per unit of risk. If you would invest 7,920 in I Jang Industrial on October 13, 2024 and sell it today you would earn a total of 960.00 from holding I Jang Industrial or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
I Jang Industrial vs. Compal Electronics
Performance |
| Timeline |
| I Jang Industrial |
| Compal Electronics |
I Jang and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with I Jang and Compal Electronics
The main advantage of trading using opposite I Jang and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if I Jang 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.| I Jang vs. AVerMedia Technologies | I Jang vs. Min Aik Technology | I Jang vs. Uniform Industrial Corp | I Jang vs. Information Technology Total |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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