Correlation Between U Media and Quanta Computer
Can any of the company-specific risk be diversified away by investing in both U Media and Quanta Computer 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 Quanta Computer 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 Quanta Computer, you can compare the effects of market volatilities on U Media and Quanta Computer 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 Quanta Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Quanta Computer.
Diversification Opportunities for U Media and Quanta Computer
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between 6470 and Quanta is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Quanta Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Computer 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 Quanta Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Computer has no effect on the direction of U Media i.e., U Media and Quanta Computer go up and down completely randomly.
Pair Corralation between U Media and Quanta Computer
Assuming the 90 days trading horizon U Media Communications is expected to generate 1.05 times more return on investment than Quanta Computer. However, U Media is 1.05 times more volatile than Quanta Computer. It trades about -0.01 of its potential returns per unit of risk. Quanta Computer is currently generating about -0.09 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Quanta Computer
Performance |
| Timeline |
| U Media Communications |
| Quanta Computer |
U Media and Quanta Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Quanta Computer
The main advantage of trading using opposite U Media and Quanta Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Quanta Computer 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 Quanta Computer will offset losses from the drop in Quanta Computer's long position.| U Media vs. Accton Technology Corp | U Media vs. HTC Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Arcadyan Technology Corp |
| Quanta Computer vs. Compal Electronics | Quanta Computer vs. Asustek Computer | Quanta Computer vs. Delta Electronics | Quanta Computer vs. Inventec 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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