Correlation Between Compal Electronics and McEwen Mining
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and McEwen Mining 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 Electronics and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compal Electronics GDR and McEwen Mining, you can compare the effects of market volatilities on Compal Electronics and McEwen Mining 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 Electronics with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and McEwen Mining.
Diversification Opportunities for Compal Electronics and McEwen Mining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compal and McEwen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics GDR and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Compal Electronics 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 Electronics GDR are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Compal Electronics i.e., Compal Electronics and McEwen Mining go up and down completely randomly.
Pair Corralation between Compal Electronics and McEwen Mining
Assuming the 90 days trading horizon Compal Electronics is expected to generate 2.27 times less return on investment than McEwen Mining. But when comparing it to its historical volatility, Compal Electronics GDR is 1.19 times less risky than McEwen Mining. It trades about 0.02 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 753.00 in McEwen Mining on September 2, 2024 and sell it today you would earn a total of 82.00 from holding McEwen Mining or generate 10.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.42% |
| Values | Daily Returns |
Compal Electronics GDR vs. McEwen Mining
Performance |
| Timeline |
| Compal Electronics GDR |
| McEwen Mining |
Compal Electronics and McEwen Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and McEwen Mining
The main advantage of trading using opposite Compal Electronics and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, McEwen Mining 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 McEwen Mining will offset losses from the drop in McEwen Mining's long position.| Compal Electronics vs. Samsung Electronics Co | Compal Electronics vs. Samsung Electronics Co | Compal Electronics vs. Hyundai Motor | Compal Electronics vs. Toyota Motor Corp |
| McEwen Mining vs. Uniper SE | McEwen Mining vs. Mulberry Group PLC | McEwen Mining vs. London Security Plc | McEwen Mining vs. Triad Group PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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