Correlation Between Chien Kuo and U Media
Can any of the company-specific risk be diversified away by investing in both Chien Kuo 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 Chien Kuo and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chien Kuo Construction and U Media Communications, you can compare the effects of market volatilities on Chien Kuo 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 Chien Kuo with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chien Kuo and U Media.
Diversification Opportunities for Chien Kuo and U Media
Average diversification
The 3 months correlation between Chien and 6470 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chien Kuo Construction 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 Chien Kuo 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 Chien Kuo Construction 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 Chien Kuo i.e., Chien Kuo and U Media go up and down completely randomly.
Pair Corralation between Chien Kuo and U Media
Assuming the 90 days trading horizon Chien Kuo Construction is expected to generate 1.04 times more return on investment than U Media. However, Chien Kuo is 1.04 times more volatile than U Media Communications. It trades about 0.09 of its potential returns per unit of risk. U Media Communications is currently generating about 0.03 per unit of risk. If you would invest 1,130 in Chien Kuo Construction on September 12, 2024 and sell it today you would earn a total of 1,625 from holding Chien Kuo Construction or generate 143.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chien Kuo Construction vs. U Media Communications
Performance |
| Timeline |
| Chien Kuo Construction |
| U Media Communications |
Chien Kuo and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chien Kuo and U Media
The main advantage of trading using opposite Chien Kuo and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chien Kuo 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.| Chien Kuo vs. Yang Ming Marine | Chien Kuo vs. Wan Hai Lines | Chien Kuo vs. U Ming Marine Transport | Chien Kuo vs. Taiwan Navigation Co |
| U Media vs. Gemtek Technology Co | U Media vs. Ruentex Development Co | U Media vs. WiseChip Semiconductor | U Media vs. Novatek Microelectronics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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