Correlation Between Compal Electronics and Egis Technology

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

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

Diversification Opportunities for Compal Electronics and Egis Technology

0.0

Correlation Coefficient

Compal Electronics  Egis Technology

Pay attention - limited upside

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

Pair Corralation between Compal Electronics and Egis Technology

If you would invest  3,195  in Compal Electronics on September 4, 2024 and sell it today you would earn a total of  585.00  from holding Compal Electronics or generate 18.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Compal Electronics  vs.  Egis Technology

Compal Electronics

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Electronics are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compal Electronics showed solid returns over the last few months and may actually be approaching a breakup point.

Egis Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Egis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Egis Technology 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 Compal Electronics and Egis Technology

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

The idea behind Compal Electronics and Egis Technology 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.