Correlation Between Symtek Automation and Compal Electronics

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

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

Diversification Opportunities for Symtek Automation and Compal Electronics

0.41

Correlation Coefficient

Symtek Automation  Compal Electronics

Very weak diversification

The 3 months correlation between Symtek and Compal is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Symtek Automation Asia and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Symtek Automation 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 Symtek Automation Asia 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 has no effect on the direction of Symtek Automation i.e., Symtek Automation and Compal Electronics go up and down completely randomly.

Pair Corralation between Symtek Automation and Compal Electronics

Assuming the 90 days trading horizon Symtek Automation Asia is expected to generate 1.67 times more return on investment than Compal Electronics. However, Symtek Automation is 1.67 times more volatile than Compal Electronics. It trades about -0.01 of its potential returns per unit of risk. Compal Electronics is currently generating about -0.15 per unit of risk. If you would invest  20,508  in Symtek Automation Asia on October 4, 2024 and sell it today you would lose (358.00) from holding Symtek Automation Asia or give up 1.75% of portfolio value over 90 days.

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

Symtek Automation Asia  vs.  Compal Electronics

Symtek Automation Asia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Symtek Automation Asia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Symtek Automation showed solid returns over the last few months and may actually be approaching a breakup point.

Compal Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Compal Electronics is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Symtek Automation and Compal Electronics

The main advantage of trading using opposite Symtek Automation and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Symtek Automation 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.

The idea behind Symtek Automation Asia and Compal Electronics 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.