Correlation Between Yong Shun and U Media

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

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

Diversification Opportunities for Yong Shun and U Media

-0.08

Correlation Coefficient

Yong Shun  U Media

Good diversification

The 3 months correlation between Yong and 6470 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Yong Shun Chemical 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 Yong Shun 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 Yong Shun Chemical 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 Yong Shun i.e., Yong Shun and U Media go up and down completely randomly.

Pair Corralation between Yong Shun and U Media

Assuming the 90 days trading horizon Yong Shun Chemical is expected to under-perform the U Media. In addition to that, Yong Shun is 1.14 times more volatile than U Media Communications. It trades about -0.01 of its total potential returns per unit of risk. U Media Communications is currently generating about 0.03 per unit of volatility. If you would invest  5,210  in U Media Communications on September 28, 2024 and sell it today you would earn a total of  240.00  from holding U Media Communications or generate 4.61% return on investment over 90 days.

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

Yong Shun Chemical  vs.  U Media Communications

Yong Shun Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yong Shun Chemical 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 January 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

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 3 (%) 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 January 2025.

Pair Trading with Yong Shun and U Media

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

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.