Correlation Between U Media and Lumax International

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

Diversification Opportunities for U Media and Lumax International

0.61

Correlation Coefficient

U Media  Lumax International

Poor diversification

The 3 months correlation between 6470 and Lumax is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Lumax International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumax International 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 Lumax International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumax International Corp has no effect on the direction of U Media i.e., U Media and Lumax International go up and down completely randomly.

Pair Corralation between U Media and Lumax International

Assuming the 90 days trading horizon U Media Communications is expected to generate 1.0 times more return on investment than Lumax International. However, U Media Communications is 1.0 times less risky than Lumax International. It trades about 0.07 of its potential returns per unit of risk. Lumax International Corp is currently generating about 0.03 per unit of risk. If you would invest  5,370  in U Media Communications on December 20, 2024 and sell it today you would earn a total of  300.00  from holding U Media Communications or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.21%
Values	Daily Returns

U Media Communications  vs.  Lumax International Corp

U Media Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 5 (%) 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 April 2025.

Lumax International Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lumax International Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lumax International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with U Media and Lumax International

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

The idea behind U Media Communications and Lumax International Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.