Correlation Between Eastern Media and TMP Steel
Can any of the company-specific risk be diversified away by investing in both Eastern Media and TMP Steel 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 TMP Steel 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 TMP Steel, you can compare the effects of market volatilities on Eastern Media and TMP Steel 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 TMP Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Media and TMP Steel.
Diversification Opportunities for Eastern Media and TMP Steel
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and TMP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Media International and TMP Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMP Steel 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 TMP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMP Steel has no effect on the direction of Eastern Media i.e., Eastern Media and TMP Steel go up and down completely randomly.
Pair Corralation between Eastern Media and TMP Steel
Assuming the 90 days trading horizon Eastern Media International is expected to under-perform the TMP Steel. In addition to that, Eastern Media is 1.84 times more volatile than TMP Steel. It trades about 0.0 of its total potential returns per unit of risk. TMP Steel is currently generating about 0.05 per unit of volatility. If you would invest 2,078 in TMP Steel on August 27, 2024 and sell it today you would earn a total of 767.00 from holding TMP Steel or generate 36.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Eastern Media International vs. TMP Steel
Performance |
| Timeline |
| Eastern Media Intern |
| TMP Steel |
Eastern Media and TMP Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Media and TMP Steel
The main advantage of trading using opposite Eastern Media and TMP Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Media position performs unexpectedly, TMP Steel 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 TMP Steel will offset losses from the drop in TMP Steel'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 |
| TMP Steel vs. Eastern Media International | TMP Steel vs. Cayenne Entertainment Technology | TMP Steel vs. Asmedia Technology | TMP Steel vs. ESUN Financial Holding |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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