Correlation Between U Media and Softstar Entertainment
Can any of the company-specific risk be diversified away by investing in both U Media and Softstar Entertainment 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 Softstar Entertainment 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 Softstar Entertainment, you can compare the effects of market volatilities on U Media and Softstar Entertainment 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 Softstar Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Softstar Entertainment.
Diversification Opportunities for U Media and Softstar Entertainment
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between 6470 and Softstar is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Softstar Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softstar Entertainment 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 Softstar Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softstar Entertainment has no effect on the direction of U Media i.e., U Media and Softstar Entertainment go up and down completely randomly.
Pair Corralation between U Media and Softstar Entertainment
Assuming the 90 days trading horizon U Media is expected to generate 1.79 times less return on investment than Softstar Entertainment. But when comparing it to its historical volatility, U Media Communications is 1.17 times less risky than Softstar Entertainment. It trades about 0.0 of its potential returns per unit of risk. Softstar Entertainment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,310 in Softstar Entertainment on October 28, 2024 and sell it today you would lose (510.00) from holding Softstar Entertainment or give up 8.08% 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. Softstar Entertainment
Performance |
| Timeline |
| U Media Communications |
| Softstar Entertainment |
U Media and Softstar Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Softstar Entertainment
The main advantage of trading using opposite U Media and Softstar Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Softstar Entertainment 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 Softstar Entertainment will offset losses from the drop in Softstar Entertainment's long position.| U Media vs. Accton Technology Corp | U Media vs. HTC Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Arcadyan Technology Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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