Correlation Between Mega Financial and U Media
Can any of the company-specific risk be diversified away by investing in both Mega Financial 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 Mega Financial and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mega Financial Holding and U Media Communications, you can compare the effects of market volatilities on Mega Financial 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 Mega Financial with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and U Media.
Diversification Opportunities for Mega Financial and U Media
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mega and 6470 is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding 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 Mega Financial 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 Mega Financial Holding 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 Mega Financial i.e., Mega Financial and U Media go up and down completely randomly.
Pair Corralation between Mega Financial and U Media
Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.38 times more return on investment than U Media. However, Mega Financial Holding is 2.6 times less risky than U Media. It trades about -0.03 of its potential returns per unit of risk. U Media Communications is currently generating about -0.27 per unit of risk. If you would invest 3,885 in Mega Financial Holding on October 26, 2024 and sell it today you would lose (15.00) from holding Mega Financial Holding or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Financial Holding vs. U Media Communications
Performance |
| Timeline |
| Mega Financial Holding |
| U Media Communications |
Mega Financial and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Financial and U Media
The main advantage of trading using opposite Mega Financial and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial 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.| Mega Financial vs. CTBC Financial Holding | Mega Financial vs. Fubon Financial Holding | Mega Financial vs. First Financial Holding | Mega Financial vs. Cathay Financial Holding |
| U Media vs. Sunfar Computer Co | U Media vs. Asustek Computer | U Media vs. Silicon Power Computer | U Media vs. SS Healthcare 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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