Correlation Between Chun Yuan and C Media

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

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

Diversification Opportunities for Chun Yuan and C Media

0.66

Correlation Coefficient

Chun Yuan  C Media

Poor diversification

The 3 months correlation between Chun and 6237 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chun Yuan Steel 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 Chun Yuan 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 Chun Yuan Steel 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 Chun Yuan i.e., Chun Yuan and C Media go up and down completely randomly.

Pair Corralation between Chun Yuan and C Media

Assuming the 90 days trading horizon Chun Yuan is expected to generate 1.45 times less return on investment than C Media. But when comparing it to its historical volatility, Chun Yuan Steel is 1.76 times less risky than C Media. It trades about 0.07 of its potential returns per unit of risk. C Media Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4,420  in C Media Electronics on September 15, 2024 and sell it today you would earn a total of  340.00  from holding C Media Electronics or generate 7.69% return on investment over 90 days.

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

Chun Yuan Steel  vs.  C Media Electronics

Chun Yuan Steel

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chun Yuan Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chun Yuan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

C Media Electronics

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chun Yuan and C Media

The main advantage of trading using opposite Chun Yuan and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chun Yuan 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 Chun Yuan Steel 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.

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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 CEOs Directory module to screen CEOs from public companies around the world.