Correlation Between U Ming and First Steamship
Can any of the company-specific risk be diversified away by investing in both U Ming and First Steamship 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 First Steamship 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 First Steamship Co, you can compare the effects of market volatilities on U Ming and First Steamship 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 First Steamship. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and First Steamship.
Diversification Opportunities for U Ming and First Steamship
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2606 and First is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and First Steamship Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Steamship 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 First Steamship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Steamship has no effect on the direction of U Ming i.e., U Ming and First Steamship go up and down completely randomly.
Pair Corralation between U Ming and First Steamship
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.47 times more return on investment than First Steamship. However, U Ming is 1.47 times more volatile than First Steamship Co. It trades about 0.02 of its potential returns per unit of risk. First Steamship Co is currently generating about -0.02 per unit of risk. If you would invest 5,090 in U Ming Marine Transport on October 24, 2024 and sell it today you would earn a total of 620.00 from holding U Ming Marine Transport or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
U Ming Marine Transport vs. First Steamship Co
Performance |
| Timeline |
| U Ming Marine |
| First Steamship |
U Ming and First Steamship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and First Steamship
The main advantage of trading using opposite U Ming and First Steamship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, First Steamship 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 First Steamship will offset losses from the drop in First Steamship's long position.| U Ming vs. Sincere Navigation Corp | U Ming vs. Wan Hai Lines | U Ming vs. Yang Ming Marine | U Ming vs. Formosa Chemicals Fibre |
| First Steamship vs. Sincere Navigation Corp | First Steamship vs. Evergreen International Storage | First Steamship vs. Far Eastern Department | First Steamship vs. Hung Sheng Construction |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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