Correlation Between Ju Teng and Compal Electronics

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

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

Diversification Opportunities for Ju Teng and Compal Electronics

-0.51

Correlation Coefficient

Ju Teng  Compal Electronics

Excellent diversification

The 3 months correlation between 9136 and Compal is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ju Teng International and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Ju Teng 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 Ju Teng International 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 Ju Teng i.e., Ju Teng and Compal Electronics go up and down completely randomly.

Pair Corralation between Ju Teng and Compal Electronics

Assuming the 90 days trading horizon Ju Teng International is expected to generate 0.7 times more return on investment than Compal Electronics. However, Ju Teng International is 1.43 times less risky than Compal Electronics. It trades about 0.23 of its potential returns per unit of risk. Compal Electronics is currently generating about -0.1 per unit of risk. If you would invest  609.00  in Ju Teng International on October 24, 2024 and sell it today you would earn a total of  41.00  from holding Ju Teng International or generate 6.73% return on investment over 90 days.

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

Ju Teng International  vs.  Compal Electronics

Ju Teng International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ju Teng International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Ju Teng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Ju Teng and Compal Electronics

The main advantage of trading using opposite Ju Teng and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ju Teng 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 Ju Teng International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.