Correlation Between Eastern Media and Prince Housing
Can any of the company-specific risk be diversified away by investing in both Eastern Media and Prince Housing 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 Eastern Media and Prince Housing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Media International and Prince Housing Development, you can compare the effects of market volatilities on Eastern Media and Prince Housing 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 Eastern Media with a short position of Prince Housing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Media and Prince Housing.
Diversification Opportunities for Eastern Media and Prince Housing
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and Prince is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Media International and Prince Housing Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prince Housing Devel and Eastern Media 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 Eastern Media International are associated (or correlated) with Prince Housing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prince Housing Devel has no effect on the direction of Eastern Media i.e., Eastern Media and Prince Housing go up and down completely randomly.
Pair Corralation between Eastern Media and Prince Housing
Assuming the 90 days trading horizon Eastern Media International is expected to generate 1.07 times more return on investment than Prince Housing. However, Eastern Media is 1.07 times more volatile than Prince Housing Development. It trades about -0.03 of its potential returns per unit of risk. Prince Housing Development is currently generating about -0.05 per unit of risk. If you would invest 2,030 in Eastern Media International on September 1, 2024 and sell it today you would lose (195.00) from holding Eastern Media International or give up 9.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Media International vs. Prince Housing Development
Performance |
| Timeline |
| Eastern Media Intern |
| Prince Housing Devel |
Eastern Media and Prince Housing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Media and Prince Housing
The main advantage of trading using opposite Eastern Media and Prince Housing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Media position performs unexpectedly, Prince Housing 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 Prince Housing will offset losses from the drop in Prince Housing's long position.| Eastern Media vs. Yang Ming Marine | Eastern Media vs. Wan Hai Lines | Eastern Media vs. U Ming Marine Transport | Eastern Media vs. Taiwan Navigation Co |
| Prince Housing vs. BenQ Materials Corp | Prince Housing vs. WIN Semiconductors | Prince Housing vs. Nankang Rubber Tire | Prince Housing vs. Holtek Semiconductor |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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