Correlation Between Standard Foods and C Media
Can any of the company-specific risk be diversified away by investing in both Standard Foods and C Media 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 Standard Foods and C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Foods Corp and C Media Electronics, you can compare the effects of market volatilities on Standard Foods and C Media 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 Standard Foods with a short position of C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Foods and C Media.
Diversification Opportunities for Standard Foods and C Media
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Standard and 6237 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Standard Foods Corp and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics and Standard Foods 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 Standard Foods Corp are associated (or correlated) with C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Standard Foods i.e., Standard Foods and C Media go up and down completely randomly.
Pair Corralation between Standard Foods and C Media
Assuming the 90 days trading horizon Standard Foods Corp is expected to under-perform the C Media. But the stock apears to be less risky and, when comparing its historical volatility, Standard Foods Corp is 2.69 times less risky than C Media. The stock trades about -0.08 of its potential returns per unit of risk. The C Media Electronics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 5,630 in C Media Electronics on September 3, 2024 and sell it today you would lose (725.00) from holding C Media Electronics or give up 12.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Foods Corp vs. C Media Electronics
Performance |
| Timeline |
| Standard Foods Corp |
| C Media Electronics |
Standard Foods and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Foods and C Media
The main advantage of trading using opposite Standard Foods and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Foods position performs unexpectedly, C Media 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 C Media will offset losses from the drop in C Media's long position.| Standard Foods vs. TTET Union Corp | Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. Charoen Pokphand Enterprise |
| C Media vs. Sitronix Technology Corp | C Media vs. Kinsus Interconnect Technology | C Media vs. WiseChip Semiconductor | C Media vs. Novatek Microelectronics Corp |
Check out your portfolio center.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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