Correlation Between Sentronic International and U Media

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

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

Diversification Opportunities for Sentronic International and U Media

0.22

Correlation Coefficient

Sentronic International  U Media

Modest diversification

The 3 months correlation between Sentronic and 6470 is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sentronic International 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 Sentronic International 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 Sentronic International 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 Sentronic International i.e., Sentronic International and U Media go up and down completely randomly.

Pair Corralation between Sentronic International and U Media

Assuming the 90 days trading horizon Sentronic International is expected to generate 1.15 times more return on investment than U Media. However, Sentronic International is 1.15 times more volatile than U Media Communications. It trades about 0.21 of its potential returns per unit of risk. U Media Communications is currently generating about 0.08 per unit of risk. If you would invest  2,360  in Sentronic International on December 23, 2024 and sell it today you would earn a total of  520.00  from holding Sentronic International or generate 22.03% return on investment over 90 days.

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

Sentronic International  vs.  U Media Communications

Sentronic International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentronic International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sentronic International showed solid returns over the last few months and may actually be approaching a breakup point.

U Media Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Sentronic International and U Media

The main advantage of trading using opposite Sentronic International and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentronic International 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 Sentronic International 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.