Correlation Between Compeq Manufacturing and Chicony Electronics

Can any of the company-specific risk be diversified away by investing in both Compeq Manufacturing and Chicony 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 Compeq Manufacturing and Chicony Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Compeq Manufacturing Co and Chicony Electronics Co, you can compare the effects of market volatilities on Compeq Manufacturing and Chicony 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 Compeq Manufacturing with a short position of Chicony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compeq Manufacturing and Chicony Electronics.

Diversification Opportunities for Compeq Manufacturing and Chicony Electronics

0.39

Correlation Coefficient

Compeq Manufacturing  Chicony Electronics

Weak diversification

The 3 months correlation between Compeq and Chicony is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Compeq Manufacturing Co and Chicony Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chicony Electronics and Compeq Manufacturing 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 Compeq Manufacturing Co are associated (or correlated) with Chicony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chicony Electronics has no effect on the direction of Compeq Manufacturing i.e., Compeq Manufacturing and Chicony Electronics go up and down completely randomly.

Pair Corralation between Compeq Manufacturing and Chicony Electronics

Assuming the 90 days trading horizon Compeq Manufacturing is expected to generate 1.26 times less return on investment than Chicony Electronics. In addition to that, Compeq Manufacturing is 1.17 times more volatile than Chicony Electronics Co. It trades about 0.05 of its total potential returns per unit of risk. Chicony Electronics Co is currently generating about 0.07 per unit of volatility. If you would invest  8,650  in Chicony Electronics Co on September 16, 2024 and sell it today you would earn a total of  6,050  from holding Chicony Electronics Co or generate 69.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Compeq Manufacturing Co  vs.  Chicony Electronics Co

Compeq Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compeq Manufacturing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Chicony Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chicony Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Compeq Manufacturing and Chicony Electronics

The main advantage of trading using opposite Compeq Manufacturing and Chicony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compeq Manufacturing position performs unexpectedly, Chicony 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 Chicony Electronics will offset losses from the drop in Chicony Electronics' long position.

The idea behind Compeq Manufacturing Co and Chicony Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.