Correlation Between Excellence Optoelectronic and C Media

Can any of the company-specific risk be diversified away by investing in both Excellence Optoelectronic and C 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 Excellence Optoelectronic and C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Excellence Optoelectronic and C Media Electronics, you can compare the effects of market volatilities on Excellence Optoelectronic and C 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 Excellence Optoelectronic with a short position of C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excellence Optoelectronic and C Media.

Diversification Opportunities for Excellence Optoelectronic and C Media

0.41

Correlation Coefficient

Excellence Optoelectronic  C Media

Very weak diversification

The 3 months correlation between Excellence and 6237 is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Excellence Optoelectronic and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics and Excellence Optoelectronic 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 Excellence Optoelectronic are associated (or correlated) with C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Excellence Optoelectronic i.e., Excellence Optoelectronic and C Media go up and down completely randomly.

Pair Corralation between Excellence Optoelectronic and C Media

Assuming the 90 days trading horizon Excellence Optoelectronic is expected to generate 1.39 times more return on investment than C Media. However, Excellence Optoelectronic is 1.39 times more volatile than C Media Electronics. It trades about 0.07 of its potential returns per unit of risk. C Media Electronics is currently generating about 0.03 per unit of risk. If you would invest  2,630  in Excellence Optoelectronic on September 1, 2024 and sell it today you would earn a total of  310.00  from holding Excellence Optoelectronic or generate 11.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Excellence Optoelectronic  vs.  C Media Electronics

Excellence Optoelectronic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Excellence Optoelectronic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Excellence Optoelectronic showed solid returns over the last few months and may actually be approaching a breakup point.

C Media Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, C Media is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Excellence Optoelectronic and C Media

The main advantage of trading using opposite Excellence Optoelectronic and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excellence Optoelectronic position performs unexpectedly, C 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 C Media will offset losses from the drop in C Media's long position.

The idea behind Excellence Optoelectronic and C Media Electronics 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.