Correlation Between Andes Technology and C Media

Can any of the company-specific risk be diversified away by investing in both Andes Technology and C Media 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 Andes Technology and C Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Andes Technology Corp and C Media Electronics, you can compare the effects of market volatilities on Andes Technology and C Media 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 Andes Technology with a short position of C Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andes Technology and C Media.

Diversification Opportunities for Andes Technology and C Media

0.16

Correlation Coefficient

Andes Technology  C Media

Average diversification

The 3 months correlation between Andes and 6237 is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Andes Technology Corp and C Media Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Media Electronics and Andes Technology 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 Andes Technology Corp are associated (or correlated) with C Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Media Electronics has no effect on the direction of Andes Technology i.e., Andes Technology and C Media go up and down completely randomly.

Pair Corralation between Andes Technology and C Media

Assuming the 90 days trading horizon Andes Technology Corp is expected to under-perform the C Media. But the stock apears to be less risky and, when comparing its historical volatility, Andes Technology Corp is 1.12 times less risky than C Media. The stock trades about -0.01 of its potential returns per unit of risk. The C Media Electronics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,845  in C Media Electronics on October 23, 2024 and sell it today you would earn a total of  1,145  from holding C Media Electronics or generate 23.63% return on investment over 90 days.

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

Andes Technology Corp  vs.  C Media Electronics

Andes Technology Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andes Technology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Andes Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

C Media Electronics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Media may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Andes Technology and C Media

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

The idea behind Andes Technology Corp and C Media Electronics 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 Stocks Directory module to find actively traded stocks across global markets.