Correlation Between U Ming and Sunspring Metal
Can any of the company-specific risk be diversified away by investing in both U Ming and Sunspring Metal 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 Sunspring Metal 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 Sunspring Metal Corp, you can compare the effects of market volatilities on U Ming and Sunspring Metal 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 Sunspring Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Sunspring Metal.
Diversification Opportunities for U Ming and Sunspring Metal
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2606 and Sunspring is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Sunspring Metal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunspring Metal Corp 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 Sunspring Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunspring Metal Corp has no effect on the direction of U Ming i.e., U Ming and Sunspring Metal go up and down completely randomly.
Pair Corralation between U Ming and Sunspring Metal
Assuming the 90 days trading horizon U Ming is expected to generate 2.28 times less return on investment than Sunspring Metal. But when comparing it to its historical volatility, U Ming Marine Transport is 1.42 times less risky than Sunspring Metal. It trades about 0.03 of its potential returns per unit of risk. Sunspring Metal Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,565 in Sunspring Metal Corp on September 14, 2024 and sell it today you would earn a total of 715.00 from holding Sunspring Metal Corp or generate 27.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Sunspring Metal Corp
Performance |
| Timeline |
| U Ming Marine |
| Sunspring Metal Corp |
U Ming and Sunspring Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Sunspring Metal
The main advantage of trading using opposite U Ming and Sunspring Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Sunspring Metal 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 Sunspring Metal will offset losses from the drop in Sunspring Metal'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 |
| Sunspring Metal vs. Yang Ming Marine | Sunspring Metal vs. Wan Hai Lines | Sunspring Metal vs. U Ming Marine Transport | Sunspring Metal vs. Taiwan Navigation Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |