Correlation Between U Media and CKM Building

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

Diversification Opportunities for U Media and CKM Building

0.38

Correlation Coefficient

U Media  CKM Building

Weak diversification

The 3 months correlation between 6470 and CKM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding U Media Communications and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material 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 CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of U Media i.e., U Media and CKM Building go up and down completely randomly.

Pair Corralation between U Media and CKM Building

Assuming the 90 days trading horizon U Media is expected to generate 2.9 times less return on investment than CKM Building. In addition to that, U Media is 1.2 times more volatile than CKM Building Material. It trades about 0.08 of its total potential returns per unit of risk. CKM Building Material is currently generating about 0.27 per unit of volatility. If you would invest  3,475  in CKM Building Material on December 22, 2024 and sell it today you would earn a total of  740.00  from holding CKM Building Material or generate 21.29% return on investment over 90 days.

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

U Media Communications  vs.  CKM Building Material

U Media Communications

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in U Media Communications are ranked lower than 6 (%) 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.

CKM Building Material

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CKM Building Material are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CKM Building showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Media and CKM Building

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

The idea behind U Media Communications and CKM Building Material 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.