Correlation Between Compal Electronics and Vitec Software

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

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

Diversification Opportunities for Compal Electronics and Vitec Software

0.0

Correlation Coefficient

Compal Electronics  Vitec Software

Pay attention - limited upside

The 3 months correlation between Compal and Vitec is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compal Electronics GDR and Vitec Software Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitec Software Group 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 GDR are associated (or correlated) with Vitec Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitec Software Group has no effect on the direction of Compal Electronics i.e., Compal Electronics and Vitec Software go up and down completely randomly.

Pair Corralation between Compal Electronics and Vitec Software

If you would invest  51,350  in Vitec Software Group on October 8, 2024 and sell it today you would earn a total of  3,550  from holding Vitec Software Group or generate 6.91% return on investment over 90 days.

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

Compal Electronics GDR  vs.  Vitec Software Group

Compal Electronics GDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compal Electronics GDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Compal Electronics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Vitec Software Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vitec Software Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vitec Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Compal Electronics and Vitec Software

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

The idea behind Compal Electronics GDR and Vitec Software Group 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.