Correlation Between Phison Electronics and U Media
Can any of the company-specific risk be diversified away by investing in both Phison Electronics and U Media 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 Phison Electronics and U Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phison Electronics and U Media Communications, you can compare the effects of market volatilities on Phison Electronics and U Media 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 Phison Electronics with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phison Electronics and U Media.
Diversification Opportunities for Phison Electronics and U Media
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Phison and 6470 is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Phison Electronics and U Media Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Media Communications and Phison Electronics 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 Phison Electronics are associated (or correlated) with U Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Media Communications has no effect on the direction of Phison Electronics i.e., Phison Electronics and U Media go up and down completely randomly.
Pair Corralation between Phison Electronics and U Media
Assuming the 90 days trading horizon Phison Electronics is expected to generate 5.25 times less return on investment than U Media. But when comparing it to its historical volatility, Phison Electronics is 1.25 times less risky than U Media. It trades about 0.07 of its potential returns per unit of risk. U Media Communications is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,975 in U Media Communications on September 12, 2024 and sell it today you would earn a total of 1,005 from holding U Media Communications or generate 20.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phison Electronics vs. U Media Communications
Performance |
| Timeline |
| Phison Electronics |
| U Media Communications |
Phison Electronics and U Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phison Electronics and U Media
The main advantage of trading using opposite Phison Electronics and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phison Electronics position performs unexpectedly, U Media 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 U Media will offset losses from the drop in U Media's long position.| Phison Electronics vs. Sunny Friend Environmental | Phison Electronics vs. Ever Clear Environmental Eng | Phison Electronics vs. Yieh United Steel | Phison Electronics vs. Tung Ho Steel |
| U Media vs. Gemtek Technology Co | U Media vs. Ruentex Development Co | U Media vs. WiseChip Semiconductor | U Media vs. Novatek Microelectronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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