Correlation Between U Media and Hannstar Display
Can any of the company-specific risk be diversified away by investing in both U Media and Hannstar Display 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 U Media and Hannstar Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Media Communications and Hannstar Display Corp, you can compare the effects of market volatilities on U Media and Hannstar Display 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 U Media with a short position of Hannstar Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Hannstar Display.
Diversification Opportunities for U Media and Hannstar Display
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 6470 and Hannstar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Hannstar Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannstar Display Corp and U Media 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 U Media Communications are associated (or correlated) with Hannstar Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannstar Display Corp has no effect on the direction of U Media i.e., U Media and Hannstar Display go up and down completely randomly.
Pair Corralation between U Media and Hannstar Display
Assuming the 90 days trading horizon U Media Communications is expected to generate 1.79 times more return on investment than Hannstar Display. However, U Media is 1.79 times more volatile than Hannstar Display Corp. It trades about 0.02 of its potential returns per unit of risk. Hannstar Display Corp is currently generating about -0.16 per unit of risk. If you would invest 5,320 in U Media Communications on October 6, 2024 and sell it today you would earn a total of 60.00 from holding U Media Communications or generate 1.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
U Media Communications vs. Hannstar Display Corp
Performance |
Timeline |
U Media Communications |
Hannstar Display Corp |
U Media and Hannstar Display Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with U Media and Hannstar Display
The main advantage of trading using opposite U Media and Hannstar Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Hannstar Display 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 Hannstar Display will offset losses from the drop in Hannstar Display's long position.U Media vs. Accton Technology Corp | U Media vs. HTC Corp | U Media vs. Wistron NeWeb Corp | U Media vs. Arcadyan Technology Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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