Correlation Between New Asia and U Media
Can any of the company-specific risk be diversified away by investing in both New Asia and U 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 New Asia and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Asia Construction and U Media Communications, you can compare the effects of market volatilities on New Asia and U 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 New Asia with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Asia and U Media.
Diversification Opportunities for New Asia and U Media
Very weak diversification
The 3 months correlation between New and 6470 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding New Asia Construction and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications and New Asia 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 New Asia Construction are associated (or correlated) with U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of New Asia i.e., New Asia and U Media go up and down completely randomly.
Pair Corralation between New Asia and U Media
Assuming the 90 days trading horizon New Asia Construction is expected to under-perform the U Media. In addition to that, New Asia is 1.06 times more volatile than U Media Communications. It trades about -0.57 of its total potential returns per unit of risk. U Media Communications is currently generating about -0.45 per unit of volatility. If you would invest 5,700 in U Media Communications on January 10, 2025 and sell it today you would lose (1,765) from holding U Media Communications or give up 30.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Asia Construction vs. U Media Communications
Performance |
| Timeline |
| New Asia Construction |
| U Media Communications |
New Asia and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Asia and U Media
The main advantage of trading using opposite New Asia and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Asia position performs unexpectedly, U 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 U Media will offset losses from the drop in U Media's long position.| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
| U Media vs. Chain Chon Industrial | U Media vs. Skardin Industrial | U Media vs. Shan Loong Transportation Co | U Media vs. Softstar Entertainment |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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