Correlation Between Montage Technology and Shaanxi Broadcast

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Can any of the company-specific risk be diversified away by investing in both Montage Technology and Shaanxi Broadcast 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 Montage Technology and Shaanxi Broadcast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montage Technology Co and Shaanxi Broadcast TV, you can compare the effects of market volatilities on Montage Technology and Shaanxi Broadcast 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 Montage Technology with a short position of Shaanxi Broadcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montage Technology and Shaanxi Broadcast.

Diversification Opportunities for Montage Technology and Shaanxi Broadcast

MontageShaanxiDiversified AwayMontageShaanxiDiversified Away100%
0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Montage and Shaanxi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Montage Technology Co and Shaanxi Broadcast TV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Broadcast and Montage Technology 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 Montage Technology Co are associated (or correlated) with Shaanxi Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Broadcast has no effect on the direction of Montage Technology i.e., Montage Technology and Shaanxi Broadcast go up and down completely randomly.

Pair Corralation between Montage Technology and Shaanxi Broadcast

Assuming the 90 days trading horizon Montage Technology Co is expected to generate 1.11 times more return on investment than Shaanxi Broadcast. However, Montage Technology is 1.11 times more volatile than Shaanxi Broadcast TV. It trades about 0.07 of its potential returns per unit of risk. Shaanxi Broadcast TV is currently generating about -0.06 per unit of risk. If you would invest  4,704  in Montage Technology Co on November 21, 2024 and sell it today you would earn a total of  2,486  from holding Montage Technology Co or generate 52.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Montage Technology Co  vs.  Shaanxi Broadcast TV

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50510
JavaScript chart by amCharts 3.21.15688008 600831
       Timeline  
Montage Technology 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Montage Technology Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Montage Technology may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb65707580
Shaanxi Broadcast 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Shaanxi Broadcast TV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shaanxi Broadcast is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2.32.42.52.62.72.82.933.1

Montage Technology and Shaanxi Broadcast Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.48-7.85-5.22-2.590.02.625.287.9410.6 0.010.020.030.040.050.06
JavaScript chart by amCharts 3.21.15688008 600831
       Returns  

Pair Trading with Montage Technology and Shaanxi Broadcast

The main advantage of trading using opposite Montage Technology and Shaanxi Broadcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montage Technology position performs unexpectedly, Shaanxi Broadcast 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 Shaanxi Broadcast will offset losses from the drop in Shaanxi Broadcast's long position.
The idea behind Montage Technology Co and Shaanxi Broadcast TV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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