Correlation Between Camellia Metal and C Media

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

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

Diversification Opportunities for Camellia Metal and C Media

0.6

Correlation Coefficient

Camellia Metal  C Media

Poor diversification

The 3 months correlation between Camellia and 6237 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Camellia Metal Co 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 Camellia Metal 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 Camellia Metal Co 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 Camellia Metal i.e., Camellia Metal and C Media go up and down completely randomly.

Pair Corralation between Camellia Metal and C Media

Assuming the 90 days trading horizon Camellia Metal Co is expected to under-perform the C Media. But the stock apears to be less risky and, when comparing its historical volatility, Camellia Metal Co is 1.38 times less risky than C Media. The stock trades about -0.03 of its potential returns per unit of risk. The C Media Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,365  in C Media Electronics on September 17, 2024 and sell it today you would earn a total of  395.00  from holding C Media Electronics or generate 9.05% return on investment over 90 days.

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

Camellia Metal Co  vs.  C Media Electronics

Camellia Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Camellia Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Camellia Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

C Media Electronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 5 (%) 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 Camellia Metal and C Media

The main advantage of trading using opposite Camellia Metal and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camellia Metal 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 Camellia Metal Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.