Correlation Between Jentech Precision and Compal Broadband

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

By analyzing existing cross correlation between Jentech Precision Industrial and Compal Broadband Networks, you can compare the effects of market volatilities on Jentech Precision and Compal Broadband 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 Jentech Precision with a short position of Compal Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jentech Precision and Compal Broadband.

Diversification Opportunities for Jentech Precision and Compal Broadband

0.2

Correlation Coefficient

Jentech Precision  Compal Broadband

Modest diversification

The 3 months correlation between Jentech and Compal is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Jentech Precision Industrial and Compal Broadband Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Broadband Networks and Jentech Precision 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 Jentech Precision Industrial are associated (or correlated) with Compal Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Broadband Networks has no effect on the direction of Jentech Precision i.e., Jentech Precision and Compal Broadband go up and down completely randomly.

Pair Corralation between Jentech Precision and Compal Broadband

Assuming the 90 days trading horizon Jentech Precision Industrial is expected to generate 1.63 times more return on investment than Compal Broadband. However, Jentech Precision is 1.63 times more volatile than Compal Broadband Networks. It trades about -0.01 of its potential returns per unit of risk. Compal Broadband Networks is currently generating about -0.1 per unit of risk. If you would invest  143,000  in Jentech Precision Industrial on December 2, 2024 and sell it today you would lose (9,000) from holding Jentech Precision Industrial or give up 6.29% of portfolio value over 90 days.

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

Jentech Precision Industrial  vs.  Compal Broadband Networks

Jentech Precision

Risk-Adjusted Performance

Very Weak

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

Compal Broadband Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compal Broadband Networks 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Jentech Precision and Compal Broadband

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

The idea behind Jentech Precision Industrial and Compal Broadband Networks 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..