Correlation Between Compal Electronics and GoldMining
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Compal Electronics and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and GoldMining.
Diversification Opportunities for Compal Electronics and GoldMining
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compal and GoldMining is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics GDR and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Compal Electronics i.e., Compal Electronics and GoldMining go up and down completely randomly.
Pair Corralation between Compal Electronics and GoldMining
Assuming the 90 days trading horizon Compal Electronics is expected to generate 1.68 times less return on investment than GoldMining. But when comparing it to its historical volatility, Compal Electronics GDR is 1.56 times less risky than GoldMining. It trades about 0.01 of its potential returns per unit of risk. GoldMining is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 123.00 in GoldMining on August 31, 2024 and sell it today you would lose (3.00) from holding GoldMining or give up 2.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 37.77% |
| Values | Daily Returns |
Compal Electronics GDR vs. GoldMining
Performance |
| Timeline |
| Compal Electronics GDR |
| GoldMining |
Compal Electronics and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and GoldMining
The main advantage of trading using opposite Compal Electronics and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| Compal Electronics vs. The Mercantile Investment | Compal Electronics vs. International Consolidated Airlines | Compal Electronics vs. Team Internet Group | Compal Electronics vs. Taylor Maritime Investments |
| GoldMining vs. New Residential Investment | GoldMining vs. The Mercantile Investment | GoldMining vs. FC Investment Trust | GoldMining vs. Compal Electronics GDR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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