Correlation Between Halyk Bank and Compal Electronics

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

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

Diversification Opportunities for Halyk Bank and Compal Electronics

0.52

Correlation Coefficient

Halyk Bank  Compal Electronics

Very weak diversification

The 3 months correlation between Halyk and Compal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Halyk Bank of and Compal Electronics GDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics GDR and Halyk Bank 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 Halyk Bank of 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 GDR has no effect on the direction of Halyk Bank i.e., Halyk Bank and Compal Electronics go up and down completely randomly.

Pair Corralation between Halyk Bank and Compal Electronics

Assuming the 90 days trading horizon Halyk Bank is expected to generate 1.67 times less return on investment than Compal Electronics. But when comparing it to its historical volatility, Halyk Bank of is 6.57 times less risky than Compal Electronics. It trades about 0.22 of its potential returns per unit of risk. Compal Electronics GDR is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Compal Electronics GDR on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Compal Electronics GDR or generate 5.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Halyk Bank of  vs.  Compal Electronics GDR

Halyk Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Halyk Bank of are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Halyk Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Compal Electronics GDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Electronics GDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Compal Electronics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Halyk Bank and Compal Electronics

The main advantage of trading using opposite Halyk Bank and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Halyk Bank 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 Halyk Bank of and Compal Electronics GDR 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.