Correlation Between Lung Hwa and C Media
Can any of the company-specific risk be diversified away by investing in both Lung Hwa 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 Lung Hwa and C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lung Hwa Electronics and C Media Electronics, you can compare the effects of market volatilities on Lung Hwa 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 Lung Hwa with a short position of C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lung Hwa and C Media.
Diversification Opportunities for Lung Hwa and C Media
Very weak diversification
The 3 months correlation between Lung and 6237 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Lung Hwa Electronics 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 Lung Hwa 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 Lung Hwa Electronics 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 Lung Hwa i.e., Lung Hwa and C Media go up and down completely randomly.
Pair Corralation between Lung Hwa and C Media
Assuming the 90 days trading horizon Lung Hwa Electronics is expected to generate 1.42 times more return on investment than C Media. However, Lung Hwa is 1.42 times more volatile than C Media Electronics. It trades about 0.03 of its potential returns per unit of risk. C Media Electronics is currently generating about -0.06 per unit of risk. If you would invest 7,930 in Lung Hwa Electronics on August 28, 2024 and sell it today you would earn a total of 70.00 from holding Lung Hwa Electronics or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lung Hwa Electronics vs. C Media Electronics
Performance |
| Timeline |
| Lung Hwa Electronics |
| C Media Electronics |
Lung Hwa and C Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lung Hwa and C Media
The main advantage of trading using opposite Lung Hwa and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lung Hwa 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.| Lung Hwa vs. Chaintech Technology Corp | Lung Hwa vs. AVerMedia Technologies | Lung Hwa vs. Avision | Lung Hwa vs. Clevo Co |
| C Media vs. Global Unichip Corp | C Media vs. Asmedia Technology | C Media vs. Unimicron Technology Corp | 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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