Correlation Between C Media and Strong H

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

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

Diversification Opportunities for C Media and Strong H

0.15

Correlation Coefficient

C Media  Strong H

Average diversification

The 3 months correlation between 6237 and Strong is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding C Media Electronics and Strong H Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strong H Machinery and C 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 C Media Electronics are associated (or correlated) with Strong H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strong H Machinery has no effect on the direction of C Media i.e., C Media and Strong H go up and down completely randomly.

Pair Corralation between C Media and Strong H

Assuming the 90 days trading horizon C Media Electronics is expected to under-perform the Strong H. In addition to that, C Media is 1.35 times more volatile than Strong H Machinery. It trades about -0.02 of its total potential returns per unit of risk. Strong H Machinery is currently generating about 0.4 per unit of volatility. If you would invest  3,255  in Strong H Machinery on September 14, 2024 and sell it today you would earn a total of  410.00  from holding Strong H Machinery or generate 12.6% return on investment over 90 days.

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

C Media Electronics  vs.  Strong H Machinery

C Media Electronics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in C Media Electronics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, C Media showed solid returns over the last few months and may actually be approaching a breakup point.

Strong H Machinery

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Strong H showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with C Media and Strong H

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

The idea behind C Media Electronics and Strong H Machinery 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.