Correlation Between Senao Networks and U Media
Can any of the company-specific risk be diversified away by investing in both Senao Networks 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 Senao Networks and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Senao Networks and U Media Communications, you can compare the effects of market volatilities on Senao Networks 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 Senao Networks with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Senao Networks and U Media.
Diversification Opportunities for Senao Networks and U Media
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Senao and 6470 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Senao Networks 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 Senao Networks 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 Senao Networks 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 Senao Networks i.e., Senao Networks and U Media go up and down completely randomly.
Pair Corralation between Senao Networks and U Media
Assuming the 90 days trading horizon Senao Networks is expected to generate 1.93 times more return on investment than U Media. However, Senao Networks is 1.93 times more volatile than U Media Communications. It trades about 0.18 of its potential returns per unit of risk. U Media Communications is currently generating about 0.01 per unit of risk. If you would invest 16,550 in Senao Networks on August 29, 2024 and sell it today you would earn a total of 4,300 from holding Senao Networks or generate 25.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Senao Networks vs. U Media Communications
Performance |
| Timeline |
| Senao Networks |
| U Media Communications |
Senao Networks and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Senao Networks and U Media
The main advantage of trading using opposite Senao Networks and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Senao Networks 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.| Senao Networks vs. Group Up Industrial | Senao Networks vs. Wiwynn Corp | Senao Networks vs. Senao International Co | Senao Networks vs. San Neng Group |
| U Media vs. Mechema Chemicals Int | U Media vs. Grand Pacific Petrochemical | U Media vs. Taita Chemical Co | U Media vs. Phoenix Silicon International |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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