Correlation Between First Hotel and U Media
Can any of the company-specific risk be diversified away by investing in both First Hotel 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 First Hotel and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and U Media Communications, you can compare the effects of market volatilities on First Hotel 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 First Hotel with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and U Media.
Diversification Opportunities for First Hotel and U Media
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and 6470 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co 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 First Hotel 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 First Hotel Co 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 First Hotel i.e., First Hotel and U Media go up and down completely randomly.
Pair Corralation between First Hotel and U Media
Assuming the 90 days trading horizon First Hotel Co is expected to under-perform the U Media. But the stock apears to be less risky and, when comparing its historical volatility, First Hotel Co is 1.82 times less risky than U Media. The stock trades about -0.06 of its potential returns per unit of risk. The U Media Communications is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 6,730 in U Media Communications on August 31, 2024 and sell it today you would lose (1,680) from holding U Media Communications or give up 24.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. U Media Communications
Performance |
| Timeline |
| First Hotel |
| U Media Communications |
First Hotel and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and U Media
The main advantage of trading using opposite First Hotel and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel 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.| First Hotel vs. Leofoo Development Co | First Hotel vs. Hotel Holiday Garden | First Hotel vs. Shin Shin Co | First Hotel vs. Hung Sheng Construction |
| U Media vs. Accton Technology Corp | U Media vs. HTC Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Arcadyan Technology 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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