Correlation Between U Ming and BES Engineering
Can any of the company-specific risk be diversified away by investing in both U Ming and BES Engineering 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 BES Engineering 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 BES Engineering Co, you can compare the effects of market volatilities on U Ming and BES Engineering 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 BES Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and BES Engineering.
Diversification Opportunities for U Ming and BES Engineering
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2606 and BES is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and BES Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BES Engineering 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 BES Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BES Engineering has no effect on the direction of U Ming i.e., U Ming and BES Engineering go up and down completely randomly.
Pair Corralation between U Ming and BES Engineering
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.71 times more return on investment than BES Engineering. However, U Ming Marine Transport is 1.4 times less risky than BES Engineering. It trades about 0.13 of its potential returns per unit of risk. BES Engineering Co is currently generating about 0.07 per unit of risk. If you would invest 5,650 in U Ming Marine Transport on September 3, 2024 and sell it today you would earn a total of 200.00 from holding U Ming Marine Transport or generate 3.54% 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. BES Engineering Co
Performance |
| Timeline |
| U Ming Marine |
| BES Engineering |
U Ming and BES Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and BES Engineering
The main advantage of trading using opposite U Ming and BES Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, BES Engineering 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 BES Engineering will offset losses from the drop in BES Engineering's long position.| U Ming vs. Universal Microelectronics Co | U Ming vs. AVerMedia Technologies | U Ming vs. Symtek Automation Asia | U Ming vs. WiseChip Semiconductor |
| BES Engineering vs. Hung Sheng Construction | BES Engineering vs. Taiwan Glass Ind | BES Engineering vs. China Petrochemical Development | BES Engineering vs. Taiwan Tea Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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