Correlation Between Compal Electronics and Hyundai

Can any of the company-specific risk be diversified away by investing in both Compal Electronics and Hyundai 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 Hyundai 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 Hyundai Motor, you can compare the effects of market volatilities on Compal Electronics and Hyundai 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 Hyundai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compal Electronics and Hyundai.

Diversification Opportunities for Compal Electronics and Hyundai

0.0

Correlation Coefficient

Compal Electronics  Hyundai

Pay attention - limited upside

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

Pair Corralation between Compal Electronics and Hyundai

If you would invest  310.00  in Compal Electronics GDR on September 30, 2024 and sell it today you would earn a total of  0.00  from holding Compal Electronics GDR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Compal Electronics GDR  vs.  Hyundai Motor

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Compal Electronics and Hyundai

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

The idea behind Compal Electronics GDR and Hyundai Motor 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.