Correlation Between U Ming and Falcon Power
Can any of the company-specific risk be diversified away by investing in both U Ming and Falcon Power 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 Ming and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between U Ming Marine Transport and Falcon Power Co, you can compare the effects of market volatilities on U Ming and Falcon Power 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 Ming with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Falcon Power.
Diversification Opportunities for U Ming and Falcon Power
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2606 and Falcon is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and U Ming 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 Ming Marine Transport are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of U Ming i.e., U Ming and Falcon Power go up and down completely randomly.
Pair Corralation between U Ming and Falcon Power
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.72 times more return on investment than Falcon Power. However, U Ming Marine Transport is 1.38 times less risky than Falcon Power. It trades about -0.09 of its potential returns per unit of risk. Falcon Power Co is currently generating about -0.11 per unit of risk. If you would invest 5,870 in U Ming Marine Transport on September 13, 2024 and sell it today you would lose (150.00) from holding U Ming Marine Transport or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Falcon Power Co
Performance |
| Timeline |
| U Ming Marine |
| Falcon Power |
U Ming and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Falcon Power
The main advantage of trading using opposite U Ming and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| U Ming vs. Yang Ming Marine | U Ming vs. Wan Hai Lines | U Ming vs. Taiwan Navigation Co | U Ming vs. China Airlines |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
Check out your portfolio center.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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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