Correlation Between U Media and Auras Technology
Can any of the company-specific risk be diversified away by investing in both U Media and Auras Technology 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 Auras Technology 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 Auras Technology Co, you can compare the effects of market volatilities on U Media and Auras Technology 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 Auras Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Auras Technology.
Diversification Opportunities for U Media and Auras Technology
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 6470 and Auras is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Auras Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auras Technology 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 Auras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auras Technology has no effect on the direction of U Media i.e., U Media and Auras Technology go up and down completely randomly.
Pair Corralation between U Media and Auras Technology
Assuming the 90 days trading horizon U Media Communications is expected to generate 0.74 times more return on investment than Auras Technology. However, U Media Communications is 1.35 times less risky than Auras Technology. It trades about -0.25 of its potential returns per unit of risk. Auras Technology Co is currently generating about -0.21 per unit of risk. If you would invest 5,300 in U Media Communications on November 5, 2024 and sell it today you would lose (350.00) from holding U Media Communications or give up 6.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Auras Technology Co
Performance |
| Timeline |
| U Media Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Auras Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
U Media and Auras Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Auras Technology
The main advantage of trading using opposite U Media and Auras Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Auras Technology 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 Auras Technology will offset losses from the drop in Auras Technology's long position.The idea behind U Media Communications and Auras Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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