Correlation Between Ma Kuang and U Media

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

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

Diversification Opportunities for Ma Kuang and U Media

-0.4

Correlation Coefficient

Ma Kuang  U Media

Very good diversification

The 3 months correlation between 4139 and 6470 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ma Kuang Healthcare 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 Ma Kuang 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 Ma Kuang Healthcare 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 Ma Kuang i.e., Ma Kuang and U Media go up and down completely randomly.

Pair Corralation between Ma Kuang and U Media

Assuming the 90 days trading horizon Ma Kuang Healthcare is expected to under-perform the U Media. But the stock apears to be less risky and, when comparing its historical volatility, Ma Kuang Healthcare is 1.41 times less risky than U Media. The stock trades about -0.23 of its potential returns per unit of risk. The U Media Communications is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  5,380  in U Media Communications on December 29, 2024 and sell it today you would earn a total of  20.00  from holding U Media Communications or generate 0.37% return on investment over 90 days.

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

Ma Kuang Healthcare  vs.  U Media Communications

Ma Kuang Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ma Kuang Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

U Media Communications

Risk-Adjusted Performance

Weak

Over the last 90 days U Media Communications has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Ma Kuang and U Media

The main advantage of trading using opposite Ma Kuang and U Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ma Kuang 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 Ma Kuang Healthcare 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.