Correlation Between U Media and AVer Information
Can any of the company-specific risk be diversified away by investing in both U Media and AVer Information 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 AVer Information 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 AVer Information, you can compare the effects of market volatilities on U Media and AVer Information 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 AVer Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and AVer Information.
Diversification Opportunities for U Media and AVer Information
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 6470 and AVer is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer Information 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 AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of U Media i.e., U Media and AVer Information go up and down completely randomly.
Pair Corralation between U Media and AVer Information
Assuming the 90 days trading horizon U Media Communications is expected to under-perform the AVer Information. In addition to that, U Media is 1.24 times more volatile than AVer Information. It trades about -0.27 of its total potential returns per unit of risk. AVer Information is currently generating about -0.33 per unit of volatility. If you would invest 4,440 in AVer Information on October 26, 2024 and sell it today you would lose (400.00) from holding AVer Information or give up 9.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. AVer Information
Performance |
| Timeline |
| U Media Communications |
| AVer Information |
U Media and AVer Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and AVer Information
The main advantage of trading using opposite U Media and AVer Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, AVer Information 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 AVer Information will offset losses from the drop in AVer Information's long position.| U Media vs. Sunfar Computer Co | U Media vs. Asustek Computer | U Media vs. Silicon Power Computer | U Media vs. SS Healthcare Holding |
| AVer Information vs. Elite Semiconductor Memory | AVer Information vs. PChome Online | AVer Information vs. WiseChip Semiconductor | AVer Information vs. Syntek Semiconductor 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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