Correlation Between U Media and Actron Technology
Can any of the company-specific risk be diversified away by investing in both U Media and Actron Technology 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 Actron Technology 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 Actron Technology, you can compare the effects of market volatilities on U Media and Actron Technology 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 Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Actron Technology.
Diversification Opportunities for U Media and Actron Technology
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 6470 and Actron is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology 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 Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of U Media i.e., U Media and Actron Technology go up and down completely randomly.
Pair Corralation between U Media and Actron Technology
Assuming the 90 days trading horizon U Media Communications is expected to generate 2.43 times more return on investment than Actron Technology. However, U Media is 2.43 times more volatile than Actron Technology. It trades about 0.09 of its potential returns per unit of risk. Actron Technology is currently generating about -0.01 per unit of risk. If you would invest 5,120 in U Media Communications on September 5, 2024 and sell it today you would earn a total of 230.00 from holding U Media Communications or generate 4.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Media Communications vs. Actron Technology
Performance |
| Timeline |
| U Media Communications |
| Actron Technology |
U Media and Actron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Media and Actron Technology
The main advantage of trading using opposite U Media and Actron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Actron Technology 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 Actron Technology will offset losses from the drop in Actron Technology's long position.| U Media vs. CHC Healthcare Group | U Media vs. Onyx Healthcare | U Media vs. Great Computer | U Media vs. Chi Hua Fitness |
| Actron Technology vs. Arima Communications Corp | Actron Technology vs. U Media Communications | Actron Technology vs. Chien Kuo Construction | Actron Technology vs. China Airlines |
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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