Correlation Between Compal Electronics and Yuanta Futures

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

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

Diversification Opportunities for Compal Electronics and Yuanta Futures

0.81

Correlation Coefficient

Compal Electronics  Yuanta Futures

Very poor diversification

The 3 months correlation between Compal and Yuanta is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics and Yuanta Futures Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuanta Futures 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 Yuanta Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuanta Futures has no effect on the direction of Compal Electronics i.e., Compal Electronics and Yuanta Futures go up and down completely randomly.

Pair Corralation between Compal Electronics and Yuanta Futures

Assuming the 90 days trading horizon Compal Electronics is expected to generate 2.42 times more return on investment than Yuanta Futures. However, Compal Electronics is 2.42 times more volatile than Yuanta Futures Co. It trades about 0.04 of its potential returns per unit of risk. Yuanta Futures Co is currently generating about -0.25 per unit of risk. If you would invest  3,705  in Compal Electronics on September 22, 2024 and sell it today you would earn a total of  35.00  from holding Compal Electronics or generate 0.94% return on investment over 90 days.

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

Compal Electronics  vs.  Yuanta Futures Co

Compal Electronics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Electronics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compal Electronics may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Yuanta Futures

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yuanta Futures Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Yuanta Futures is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Compal Electronics and Yuanta Futures

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

The idea behind Compal Electronics and Yuanta Futures 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.