Correlation Between Loop Telecommunicatio and Compal Broadband

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

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

Diversification Opportunities for Loop Telecommunicatio and Compal Broadband

-0.26

Correlation Coefficient

Loop Telecommunicatio  Compal Broadband

Very good diversification

The 3 months correlation between Loop and Compal is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Loop Telecommunication Interna and Compal Broadband Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compal Broadband Networks and Loop Telecommunicatio 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 Loop Telecommunication International are associated (or correlated) with Compal Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compal Broadband Networks has no effect on the direction of Loop Telecommunicatio i.e., Loop Telecommunicatio and Compal Broadband go up and down completely randomly.

Pair Corralation between Loop Telecommunicatio and Compal Broadband

Assuming the 90 days trading horizon Loop Telecommunicatio is expected to generate 11.21 times less return on investment than Compal Broadband. But when comparing it to its historical volatility, Loop Telecommunication International is 1.74 times less risky than Compal Broadband. It trades about 0.04 of its potential returns per unit of risk. Compal Broadband Networks is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,720  in Compal Broadband Networks on April 22, 2025 and sell it today you would earn a total of  1,130  from holding Compal Broadband Networks or generate 65.7% return on investment over 90 days.

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

Loop Telecommunication Interna  vs.  Compal Broadband Networks

Loop Telecommunication

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Loop Telecommunication International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Loop Telecommunicatio is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Compal Broadband Networks

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Compal Broadband Networks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Compal Broadband showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loop Telecommunicatio and Compal Broadband

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

The idea behind Loop Telecommunication International and Compal Broadband Networks 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.