Correlation Between U Media and Iron Force
Can any of the company-specific risk be diversified away by investing in both U Media and Iron Force 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 U Media and Iron Force into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Media Communications and Iron Force Industrial, you can compare the effects of market volatilities on U Media and Iron Force 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 U Media with a short position of Iron Force. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Iron Force.
Diversification Opportunities for U Media and Iron Force
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between 6470 and Iron is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Iron Force Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Force Industrial and U 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 U Media Communications are associated (or correlated) with Iron Force. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Force Industrial has no effect on the direction of U Media i.e., U Media and Iron Force go up and down completely randomly.
Pair Corralation between U Media and Iron Force
Assuming the 90 days trading horizon U Media Communications is expected to under-perform the Iron Force. In addition to that, U Media is 1.37 times more volatile than Iron Force Industrial. It trades about -0.22 of its total potential returns per unit of risk. Iron Force Industrial is currently generating about -0.24 per unit of volatility. If you would invest 10,000 in Iron Force Industrial on October 25, 2024 and sell it today you would lose (620.00) from holding Iron Force Industrial or give up 6.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Iron Force Industrial
Performance |
| Timeline |
| U Media Communications |
| Iron Force Industrial |
U Media and Iron Force Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Iron Force
The main advantage of trading using opposite U Media and Iron Force positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Iron Force 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 Iron Force will offset losses from the drop in Iron Force's long position.| U Media vs. Far EasTone Telecommunications | U Media vs. Tehmag Foods | U Media vs. Silicon Power Computer | U Media vs. Wei Chuan Foods |
| Iron Force vs. Jentech Precision Industrial | Iron Force vs. Yusin Holding Corp | Iron Force vs. Laster Tech Corp | Iron Force vs. Turvo International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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