Correlation Between U Media and Taiwan Weighted
Can any of the company-specific risk be diversified away by investing in both U Media and Taiwan Weighted 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 Taiwan Weighted 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 Taiwan Weighted, you can compare the effects of market volatilities on U Media and Taiwan Weighted 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 Taiwan Weighted. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Taiwan Weighted.
Diversification Opportunities for U Media and Taiwan Weighted
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between 6470 and Taiwan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Taiwan Weighted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Weighted 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 Taiwan Weighted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Weighted has no effect on the direction of U Media i.e., U Media and Taiwan Weighted go up and down completely randomly.
Pair Corralation between U Media and Taiwan Weighted
Assuming the 90 days trading horizon U Media is expected to generate 14.55 times less return on investment than Taiwan Weighted. In addition to that, U Media is 2.63 times more volatile than Taiwan Weighted. It trades about 0.0 of its total potential returns per unit of risk. Taiwan Weighted is currently generating about 0.11 per unit of volatility. If you would invest 2,167,884 in Taiwan Weighted on September 18, 2024 and sell it today you would earn a total of 136,106 from holding Taiwan Weighted or generate 6.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.24% |
Values | Daily Returns |
U Media Communications vs. Taiwan Weighted
Performance |
Timeline |
U Media and Taiwan Weighted Volatility Contrast
Predicted Return Density |
Returns |
U Media Communications
Pair trading matchups for U Media
Taiwan Weighted
Pair trading matchups for Taiwan Weighted
Pair Trading with U Media and Taiwan Weighted
The main advantage of trading using opposite U Media and Taiwan Weighted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Taiwan Weighted 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 Taiwan Weighted will offset losses from the drop in Taiwan Weighted's long position.U Media vs. Tang Eng Iron | U Media vs. Century Iron And | U Media vs. Chia Yi Steel | U Media vs. Sunspring Metal Corp |
Taiwan Weighted vs. Sporton International | Taiwan Weighted vs. Shinkong Insurance Co | Taiwan Weighted vs. U Media Communications | Taiwan Weighted vs. Air Asia Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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