Correlation Between U Media and Acer E

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

Diversification Opportunities for U Media and Acer E

0.63

Correlation Coefficient

U Media  Acer E

Poor diversification

The 3 months correlation between 6470 and Acer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and Acer E Enabling Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acer E Enabling 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 Acer E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acer E Enabling has no effect on the direction of U Media i.e., U Media and Acer E go up and down completely randomly.

Pair Corralation between U Media and Acer E

Assuming the 90 days trading horizon U Media Communications is expected to generate 0.62 times more return on investment than Acer E. However, U Media Communications is 1.61 times less risky than Acer E. It trades about 0.49 of its potential returns per unit of risk. Acer E Enabling Service is currently generating about -0.07 per unit of risk. If you would invest  4,835  in U Media Communications on December 2, 2024 and sell it today you would earn a total of  525.00  from holding U Media Communications or generate 10.86% return on investment over 90 days.

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

U Media Communications  vs.  Acer E Enabling Service

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 3 (%) 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.

Acer E Enabling

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acer E Enabling Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acer E showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Media and Acer E

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

The idea behind U Media Communications and Acer E Enabling Service 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..