Correlation Between Shaanxi Broadcast and Focus Media

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Can any of the company-specific risk be diversified away by investing in both Shaanxi Broadcast and Focus 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 Shaanxi Broadcast and Focus Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shaanxi Broadcast TV and Focus Media Information, you can compare the effects of market volatilities on Shaanxi Broadcast and Focus 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 Shaanxi Broadcast with a short position of Focus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Broadcast and Focus Media.

Diversification Opportunities for Shaanxi Broadcast and Focus Media

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Shaanxi and Focus is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Broadcast TV and Focus Media Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Media Information and Shaanxi Broadcast 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 Shaanxi Broadcast TV are associated (or correlated) with Focus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Media Information has no effect on the direction of Shaanxi Broadcast i.e., Shaanxi Broadcast and Focus Media go up and down completely randomly.

Pair Corralation between Shaanxi Broadcast and Focus Media

Assuming the 90 days trading horizon Shaanxi Broadcast TV is expected to generate 2.2 times more return on investment than Focus Media. However, Shaanxi Broadcast is 2.2 times more volatile than Focus Media Information. It trades about 0.1 of its potential returns per unit of risk. Focus Media Information is currently generating about -0.03 per unit of risk. If you would invest  267.00  in Shaanxi Broadcast TV on September 25, 2024 and sell it today you would earn a total of  13.00  from holding Shaanxi Broadcast TV or generate 4.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Shaanxi Broadcast TV  vs.  Focus Media Information

 Performance 
       Timeline  
Shaanxi Broadcast 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shaanxi Broadcast TV are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shaanxi Broadcast sustained solid returns over the last few months and may actually be approaching a breakup point.
Focus Media Information 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Focus Media Information are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Focus Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Shaanxi Broadcast and Focus Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shaanxi Broadcast and Focus Media

The main advantage of trading using opposite Shaanxi Broadcast and Focus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Broadcast position performs unexpectedly, Focus 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 Focus Media will offset losses from the drop in Focus Media's long position.
The idea behind Shaanxi Broadcast TV and Focus Media Information 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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