Correlation Between Chain Chon and U Media
Can any of the company-specific risk be diversified away by investing in both Chain Chon 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 Chain Chon and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chain Chon Industrial and U Media Communications, you can compare the effects of market volatilities on Chain Chon 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 Chain Chon with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chain Chon and U Media.
Diversification Opportunities for Chain Chon and U Media
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chain and 6470 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chain Chon 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 Chain Chon 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 Chain Chon 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 Chain Chon i.e., Chain Chon and U Media go up and down completely randomly.
Pair Corralation between Chain Chon and U Media
Assuming the 90 days trading horizon Chain Chon Industrial is expected to under-perform the U Media. In addition to that, Chain Chon is 1.27 times more volatile than U Media Communications. It trades about -0.32 of its total potential returns per unit of risk. U Media Communications is currently generating about -0.01 per unit of volatility. If you would invest 5,090 in U Media Communications on September 2, 2024 and sell it today you would lose (40.00) from holding U Media Communications or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chain Chon Industrial vs. U Media Communications
Performance |
| Timeline |
| Chain Chon Industrial |
| U Media Communications |
Chain Chon and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chain Chon and U Media
The main advantage of trading using opposite Chain Chon and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chain Chon 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.| Chain Chon vs. Trade Van Information Services | Chain Chon vs. C Media Electronics | Chain Chon vs. Mitake Information | Chain Chon vs. Pili International Multimedia |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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