Correlation Between U Media and Chi Sheng
Can any of the company-specific risk be diversified away by investing in both U Media and Chi Sheng 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 Chi Sheng 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 Chi Sheng Chemical, you can compare the effects of market volatilities on U Media and Chi Sheng 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 Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Chi Sheng.
Diversification Opportunities for U Media and Chi Sheng
Good diversification
The 3 months correlation between 6470 and Chi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical 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 Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of U Media i.e., U Media and Chi Sheng go up and down completely randomly.
Pair Corralation between U Media and Chi Sheng
Assuming the 90 days trading horizon U Media Communications is expected to under-perform the Chi Sheng. In addition to that, U Media is 1.7 times more volatile than Chi Sheng Chemical. It trades about -0.03 of its total potential returns per unit of risk. Chi Sheng Chemical is currently generating about -0.03 per unit of volatility. If you would invest 2,910 in Chi Sheng Chemical on September 3, 2024 and sell it today you would lose (135.00) from holding Chi Sheng Chemical or give up 4.64% 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. Chi Sheng Chemical
Performance |
| Timeline |
| U Media Communications |
| Chi Sheng Chemical |
U Media and Chi Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Chi Sheng
The main advantage of trading using opposite U Media and Chi Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Chi Sheng 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 Chi Sheng will offset losses from the drop in Chi Sheng's long position.| U Media vs. Accton Technology Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Alpha Networks | U Media vs. Gemtek Technology Co |
| Chi Sheng vs. SciVision Biotech | Chi Sheng vs. WiseChip Semiconductor | Chi Sheng vs. Novatek Microelectronics Corp | Chi Sheng vs. Leader Electronics |
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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