Correlation Between Worldwide Healthcare and Compal Electronics
Can any of the company-specific risk be diversified away by investing in both Worldwide Healthcare 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 Worldwide Healthcare and Compal Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldwide Healthcare Trust and Compal Electronics GDR, you can compare the effects of market volatilities on Worldwide Healthcare 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 Worldwide Healthcare with a short position of Compal Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldwide Healthcare and Compal Electronics.
Diversification Opportunities for Worldwide Healthcare and Compal Electronics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Worldwide and Compal is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Worldwide Healthcare Trust and Compal Electronics GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics GDR and Worldwide Healthcare 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 Worldwide Healthcare Trust 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 GDR has no effect on the direction of Worldwide Healthcare i.e., Worldwide Healthcare and Compal Electronics go up and down completely randomly.
Pair Corralation between Worldwide Healthcare and Compal Electronics
Assuming the 90 days trading horizon Worldwide Healthcare is expected to generate 5.07 times less return on investment than Compal Electronics. But when comparing it to its historical volatility, Worldwide Healthcare Trust is 2.46 times less risky than Compal Electronics. It trades about 0.01 of its potential returns per unit of risk. Compal Electronics GDR is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Compal Electronics GDR on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Compal Electronics GDR or generate 4.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Worldwide Healthcare Trust vs. Compal Electronics GDR
Performance |
| Timeline |
| Worldwide Healthcare |
| Compal Electronics GDR |
Worldwide Healthcare and Compal Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldwide Healthcare and Compal Electronics
The main advantage of trading using opposite Worldwide Healthcare and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldwide Healthcare 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.| Worldwide Healthcare vs. Aeorema Communications Plc | Worldwide Healthcare vs. Spirent Communications plc | Worldwide Healthcare vs. Charter Communications Cl | Worldwide Healthcare vs. Team Internet Group |
| Compal Electronics vs. Planet Fitness Cl | Compal Electronics vs. Inspiration Healthcare Group | Compal Electronics vs. Cairo Communication SpA | Compal Electronics vs. Worldwide Healthcare Trust |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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