Correlation Between U Ming and Evergreen Marine
Can any of the company-specific risk be diversified away by investing in both U Ming and Evergreen Marine 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 Evergreen Marine 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 Evergreen Marine Corp, you can compare the effects of market volatilities on U Ming and Evergreen Marine 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 Evergreen Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Evergreen Marine.
Diversification Opportunities for U Ming and Evergreen Marine
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 2606 and Evergreen is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Evergreen Marine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evergreen Marine 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 Evergreen Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evergreen Marine Corp has no effect on the direction of U Ming i.e., U Ming and Evergreen Marine go up and down completely randomly.
Pair Corralation between U Ming and Evergreen Marine
Assuming the 90 days trading horizon U Ming is expected to generate 2.16 times less return on investment than Evergreen Marine. But when comparing it to its historical volatility, U Ming Marine Transport is 1.1 times less risky than Evergreen Marine. It trades about 0.06 of its potential returns per unit of risk. Evergreen Marine Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 10,500 in Evergreen Marine Corp on August 26, 2024 and sell it today you would earn a total of 13,100 from holding Evergreen Marine Corp or generate 124.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Evergreen Marine Corp
Performance |
| Timeline |
| U Ming Marine |
| Evergreen Marine Corp |
U Ming and Evergreen Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Evergreen Marine
The main advantage of trading using opposite U Ming and Evergreen Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Evergreen Marine 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 Evergreen Marine will offset losses from the drop in Evergreen Marine's long position.| U Ming vs. Sunny Friend Environmental | U Ming vs. TTET Union Corp | U Ming vs. ECOVE Environment Corp | U Ming vs. Yulon Finance Corp |
| Evergreen Marine vs. Sunny Friend Environmental | Evergreen Marine vs. TTET Union Corp | Evergreen Marine vs. ECOVE Environment Corp | Evergreen Marine vs. Yulon Finance 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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