Correlation Between Compal Electronics and Yung Zip

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

By analyzing existing cross correlation between Compal Electronics and Yung Zip Chemical, you can compare the effects of market volatilities on Compal Electronics and Yung Zip 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 Yung Zip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Yung Zip.

Diversification Opportunities for Compal Electronics and Yung Zip

-0.37

Correlation Coefficient

Compal Electronics  Yung Zip

Very good diversification

The 3 months correlation between Compal and Yung is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Yung Zip Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yung Zip Chemical 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 are associated (or correlated) with Yung Zip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yung Zip Chemical has no effect on the direction of Compal Electronics i.e., Compal Electronics and Yung Zip go up and down completely randomly.

Pair Corralation between Compal Electronics and Yung Zip

Assuming the 90 days trading horizon Compal Electronics is expected to under-perform the Yung Zip. In addition to that, Compal Electronics is 1.04 times more volatile than Yung Zip Chemical. It trades about -0.1 of its total potential returns per unit of risk. Yung Zip Chemical is currently generating about 0.1 per unit of volatility. If you would invest  3,015  in Yung Zip Chemical on October 24, 2024 and sell it today you would earn a total of  110.00  from holding Yung Zip Chemical or generate 3.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Compal Electronics  vs.  Yung Zip Chemical

Compal Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compal Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Compal Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yung Zip Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yung Zip Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Compal Electronics and Yung Zip

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

The idea behind Compal Electronics and Yung Zip Chemical 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.