Correlation Between Chialin Precision and U Media
Can any of the company-specific risk be diversified away by investing in both Chialin Precision 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 Chialin Precision and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chialin Precision Industrial and U Media Communications, you can compare the effects of market volatilities on Chialin Precision 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 Chialin Precision with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chialin Precision and U Media.
Diversification Opportunities for Chialin Precision and U Media
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chialin and 6470 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Chialin Precision Industrial 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 Chialin Precision 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 Chialin Precision Industrial 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 Chialin Precision i.e., Chialin Precision and U Media go up and down completely randomly.
Pair Corralation between Chialin Precision and U Media
Assuming the 90 days trading horizon Chialin Precision Industrial is expected to generate 0.68 times more return on investment than U Media. However, Chialin Precision Industrial is 1.47 times less risky than U Media. It trades about -0.35 of its potential returns per unit of risk. U Media Communications is currently generating about -0.24 per unit of risk. If you would invest 9,620 in Chialin Precision Industrial on November 7, 2024 and sell it today you would lose (670.00) from holding Chialin Precision Industrial or give up 6.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chialin Precision Industrial vs. U Media Communications
Performance |
| Timeline |
| Chialin Precision |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| U Media Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chialin Precision and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chialin Precision and U Media
The main advantage of trading using opposite Chialin Precision and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chialin Precision 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.The idea behind Chialin Precision Industrial and U Media Communications pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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