Correlation Between U Media and Simplo Technology

Can any of the company-specific risk be diversified away by investing in both U Media and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on U Media and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Media and Simplo Technology.

Diversification Opportunities for U Media and Simplo Technology

0.5

Correlation Coefficient

U Media  Simplo Technology

Very weak diversification

The 3 months correlation between 6470 and Simplo is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of U Media i.e., U Media and Simplo Technology go up and down completely randomly.

Pair Corralation between U Media and Simplo Technology

Assuming the 90 days trading horizon U Media is expected to generate 4.83 times less return on investment than Simplo Technology. In addition to that, U Media is 1.2 times more volatile than Simplo Technology Co. It trades about 0.01 of its total potential returns per unit of risk. Simplo Technology Co is currently generating about 0.04 per unit of volatility. If you would invest  29,000  in Simplo Technology Co on October 11, 2024 and sell it today you would earn a total of  10,550  from holding Simplo Technology Co or generate 36.38% return on investment over 90 days.

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

U Media Communications  vs.  Simplo Technology Co

U Media Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Simplo Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Simplo Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Simplo Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with U Media and Simplo Technology

The main advantage of trading using opposite U Media and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Media position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology's long position.

The idea behind U Media Communications and Simplo Technology Co 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.