Correlation Between Fu Burg and U Media

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

By analyzing existing cross correlation between Fu Burg Industrial and U Media Communications, you can compare the effects of market volatilities on Fu Burg 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 Fu Burg with a short position of U Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fu Burg and U Media.

Diversification Opportunities for Fu Burg and U Media

0.19

Correlation Coefficient

Fu Burg  U Media

Average diversification

The 3 months correlation between 8929 and 6470 is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Fu Burg Industrial 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 Fu Burg 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 Fu Burg Industrial 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 Fu Burg i.e., Fu Burg and U Media go up and down completely randomly.

Pair Corralation between Fu Burg and U Media

Assuming the 90 days trading horizon Fu Burg Industrial is expected to generate 1.66 times more return on investment than U Media. However, Fu Burg is 1.66 times more volatile than U Media Communications. It trades about 0.07 of its potential returns per unit of risk. U Media Communications is currently generating about 0.02 per unit of risk. If you would invest  2,280  in Fu Burg Industrial on September 14, 2024 and sell it today you would earn a total of  330.00  from holding Fu Burg Industrial or generate 14.47% return on investment over 90 days.

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

Fu Burg Industrial  vs.  U Media Communications

Fu Burg Industrial

Risk-Adjusted Performance

5 of 100

Modest

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

U Media Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, U 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 Fu Burg and U Media

The main advantage of trading using opposite Fu Burg and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fu Burg 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.

The idea behind Fu Burg Industrial and U Media Communications 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.