Correlation Between Compal Broadband and Loop Telecommunicatio

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

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

Diversification Opportunities for Compal Broadband and Loop Telecommunicatio

0.09

Correlation Coefficient

Compal Broadband  Loop Telecommunicatio

Significant diversification

The 3 months correlation between Compal and Loop is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Compal Broadband Networks and Loop Telecommunication Interna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Telecommunication and Compal Broadband 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 Broadband Networks are associated (or correlated) with Loop Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Telecommunication has no effect on the direction of Compal Broadband i.e., Compal Broadband and Loop Telecommunicatio go up and down completely randomly.

Pair Corralation between Compal Broadband and Loop Telecommunicatio

Assuming the 90 days trading horizon Compal Broadband is expected to generate 30.88 times less return on investment than Loop Telecommunicatio. But when comparing it to its historical volatility, Compal Broadband Networks is 1.87 times less risky than Loop Telecommunicatio. It trades about 0.01 of its potential returns per unit of risk. Loop Telecommunication International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,025  in Loop Telecommunication International on September 14, 2024 and sell it today you would earn a total of  5,875  from holding Loop Telecommunication International or generate 290.12% return on investment over 90 days.

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

Compal Broadband Networks  vs.  Loop Telecommunication Interna

Compal Broadband Networks

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Broadband Networks are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Compal Broadband is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Loop Telecommunication

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Compal Broadband and Loop Telecommunicatio

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

The idea behind Compal Broadband Networks and Loop Telecommunication International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.