Correlation Between Compal Electronics and Inchcape PLC
Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Inchcape PLC 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 Inchcape PLC 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 Inchcape PLC, you can compare the effects of market volatilities on Compal Electronics and Inchcape PLC 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 Inchcape PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Inchcape PLC.
Diversification Opportunities for Compal Electronics and Inchcape PLC
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compal and Inchcape is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics GDR and Inchcape PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inchcape PLC 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 Inchcape PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inchcape PLC has no effect on the direction of Compal Electronics i.e., Compal Electronics and Inchcape PLC go up and down completely randomly.
Pair Corralation between Compal Electronics and Inchcape PLC
If you would invest 74,650 in Inchcape PLC on September 12, 2024 and sell it today you would earn a total of 3,800 from holding Inchcape PLC or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Compal Electronics GDR vs. Inchcape PLC
Performance |
| Timeline |
| Compal Electronics GDR |
| Inchcape PLC |
Compal Electronics and Inchcape PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compal Electronics and Inchcape PLC
The main advantage of trading using opposite Compal Electronics and Inchcape PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compal Electronics position performs unexpectedly, Inchcape PLC 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 Inchcape PLC will offset losses from the drop in Inchcape PLC's long position.| Compal Electronics vs. Home Depot | Compal Electronics vs. Chrysalis Investments | Compal Electronics vs. Neometals | Compal Electronics vs. Coor Service Management |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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