Correlation Between Buima and C Media

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

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

Diversification Opportunities for Buima and C Media

-0.28

Correlation Coefficient

Buima  C Media

Very good diversification

The 3 months correlation between Buima and 6237 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Buima Group 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 Buima 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 Buima Group 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 Buima i.e., Buima and C Media go up and down completely randomly.

Pair Corralation between Buima and C Media

Assuming the 90 days trading horizon Buima Group is expected to generate 1.26 times more return on investment than C Media. However, Buima is 1.26 times more volatile than C Media Electronics. It trades about 0.07 of its potential returns per unit of risk. C Media Electronics is currently generating about 0.04 per unit of risk. If you would invest  2,050  in Buima Group on October 25, 2024 and sell it today you would earn a total of  310.00  from holding Buima Group or generate 15.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Buima Group  vs.  C Media Electronics

Buima Group

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Buima Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Buima showed solid returns over the last few months and may actually be approaching a breakup point.

C Media Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, C Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Buima and C Media

The main advantage of trading using opposite Buima and C Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buima 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 Buima Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.