Correlation Between Acer and Compal Electronics

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

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

Diversification Opportunities for Acer and Compal Electronics

-0.1

Correlation Coefficient

Acer  Compal Electronics

Good diversification

The 3 months correlation between Acer and Compal is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Acer Inc and Compal Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Electronics and Acer 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 Acer Inc 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 has no effect on the direction of Acer i.e., Acer and Compal Electronics go up and down completely randomly.

Pair Corralation between Acer and Compal Electronics

Assuming the 90 days trading horizon Acer Inc is expected to under-perform the Compal Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Acer Inc is 1.24 times less risky than Compal Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The Compal Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,705  in Compal Electronics on April 20, 2025 and sell it today you would earn a total of  195.00  from holding Compal Electronics or generate 7.21% return on investment over 90 days.

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

Acer Inc  vs.  Compal Electronics

Acer Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acer Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Acer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Compal Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Electronics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compal Electronics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Acer and Compal Electronics

The main advantage of trading using opposite Acer and Compal Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acer 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 Acer Inc and Compal Electronics 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 Stocks Directory module to find actively traded stocks across global markets.