Correlation Between U Media and ThinTech Materials
Can any of the company-specific risk be diversified away by investing in both U Media and ThinTech Materials 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 ThinTech Materials 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 ThinTech Materials Technology, you can compare the effects of market volatilities on U Media and ThinTech Materials 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 ThinTech Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and ThinTech Materials.
Diversification Opportunities for U Media and ThinTech Materials
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6470 and ThinTech is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and ThinTech Materials Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ThinTech Materials 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 ThinTech Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ThinTech Materials has no effect on the direction of U Media i.e., U Media and ThinTech Materials go up and down completely randomly.
Pair Corralation between U Media and ThinTech Materials
Assuming the 90 days trading horizon U Media Communications is expected to generate 0.6 times more return on investment than ThinTech Materials. However, U Media Communications is 1.65 times less risky than ThinTech Materials. It trades about -0.22 of its potential returns per unit of risk. ThinTech Materials Technology is currently generating about -0.27 per unit of risk. If you would invest 5,370 in U Media Communications on October 25, 2024 and sell it today you would lose (420.00) from holding U Media Communications or give up 7.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. ThinTech Materials Technology
Performance |
| Timeline |
| U Media Communications |
| ThinTech Materials |
U Media and ThinTech Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and ThinTech Materials
The main advantage of trading using opposite U Media and ThinTech Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, ThinTech Materials 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 ThinTech Materials will offset losses from the drop in ThinTech Materials' 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 |
| ThinTech Materials vs. Jetwell Computer Co | ThinTech Materials vs. U Media Communications | ThinTech Materials vs. Iron Force Industrial | ThinTech Materials vs. Elitegroup Computer Systems |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |