Correlation Between U Media and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both U Media and Chien Kuo 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 Chien Kuo 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 Chien Kuo Construction, you can compare the effects of market volatilities on U Media and Chien Kuo 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 Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Chien Kuo.
Diversification Opportunities for U Media and Chien Kuo
Average diversification
The 3 months correlation between 6470 and Chien is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction 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 Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of U Media i.e., U Media and Chien Kuo go up and down completely randomly.
Pair Corralation between U Media and Chien Kuo
Assuming the 90 days trading horizon U Media is expected to generate 3.9 times less return on investment than Chien Kuo. But when comparing it to its historical volatility, U Media Communications is 1.04 times less risky than Chien Kuo. It trades about 0.03 of its potential returns per unit of risk. Chien Kuo Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,130 in Chien Kuo Construction on September 12, 2024 and sell it today you would earn a total of 1,625 from holding Chien Kuo Construction or generate 143.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Chien Kuo Construction
Performance |
| Timeline |
| U Media Communications |
| Chien Kuo Construction |
U Media and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Chien Kuo
The main advantage of trading using opposite U Media and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo's long position.| U Media vs. Gemtek Technology Co | U Media vs. Ruentex Development Co | U Media vs. WiseChip Semiconductor | U Media vs. Novatek Microelectronics Corp |
| Chien Kuo vs. Yang Ming Marine | Chien Kuo vs. Wan Hai Lines | Chien Kuo vs. U Ming Marine Transport | Chien Kuo vs. Taiwan Navigation 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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