Correlation Between C Media and Dawushan Farm
Can any of the company-specific risk be diversified away by investing in both C Media and Dawushan Farm 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 C Media and Dawushan Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between C Media Electronics and Dawushan Farm Tech, you can compare the effects of market volatilities on C Media and Dawushan Farm 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 C Media with a short position of Dawushan Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of C Media and Dawushan Farm.
Diversification Opportunities for C Media and Dawushan Farm
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6237 and Dawushan is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding C Media Electronics and Dawushan Farm Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawushan Farm Tech and C Media 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 C Media Electronics are associated (or correlated) with Dawushan Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawushan Farm Tech has no effect on the direction of C Media i.e., C Media and Dawushan Farm go up and down completely randomly.
Pair Corralation between C Media and Dawushan Farm
Assuming the 90 days trading horizon C Media Electronics is expected to under-perform the Dawushan Farm. But the stock apears to be less risky and, when comparing its historical volatility, C Media Electronics is 1.33 times less risky than Dawushan Farm. The stock trades about -0.1 of its potential returns per unit of risk. The Dawushan Farm Tech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,650 in Dawushan Farm Tech on September 2, 2024 and sell it today you would earn a total of 345.00 from holding Dawushan Farm Tech or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
C Media Electronics vs. Dawushan Farm Tech
Performance |
| Timeline |
| C Media Electronics |
| Dawushan Farm Tech |
C Media and Dawushan Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with C Media and Dawushan Farm
The main advantage of trading using opposite C Media and Dawushan Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if C Media position performs unexpectedly, Dawushan Farm 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 Dawushan Farm will offset losses from the drop in Dawushan Farm's long position.| C Media vs. Dawushan Farm Tech | C Media vs. Standard Foods Corp | C Media vs. Lihtai Construction Enterprise | C Media vs. Central Reinsurance Corp |
| Dawushan Farm vs. Taiwan Semiconductor Manufacturing | Dawushan Farm vs. Hon Hai Precision | Dawushan Farm vs. MediaTek | Dawushan Farm vs. Chunghwa Telecom Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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