Correlation Between Compal Electronics and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Ross Stores 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 Ross Stores 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 Ross Stores, you can compare the effects of market volatilities on Compal Electronics and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Ross Stores.
Diversification Opportunities for Compal Electronics and Ross Stores
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compal and Ross is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics GDR and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Compal Electronics i.e., Compal Electronics and Ross Stores go up and down completely randomly.
Pair Corralation between Compal Electronics and Ross Stores
Assuming the 90 days trading horizon Compal Electronics is expected to generate 3.14 times less return on investment than Ross Stores. In addition to that, Compal Electronics is 1.69 times more volatile than Ross Stores. It trades about 0.01 of its total potential returns per unit of risk. Ross Stores is currently generating about 0.06 per unit of volatility. If you would invest 10,976 in Ross Stores on October 24, 2024 and sell it today you would earn a total of 3,821 from holding Ross Stores or generate 34.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.22% |
| Values | Daily Returns |
Compal Electronics GDR vs. Ross Stores
Performance |
| Timeline |
| Compal Electronics GDR |
| Ross Stores |
Compal Electronics and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Ross Stores
The main advantage of trading using opposite Compal Electronics and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Compal Electronics vs. Symphony Environmental Technologies | Compal Electronics vs. Orient Telecoms | Compal Electronics vs. Charter Communications Cl | Compal Electronics vs. Spotify Technology SA |
| Ross Stores vs. Silvercorp Metals | Ross Stores vs. Virgin Wines UK | Ross Stores vs. Jacquet Metal Service | Ross Stores vs. Naked Wines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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