Correlation Between U Ming and Kerry TJ
Can any of the company-specific risk be diversified away by investing in both U Ming and Kerry TJ 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 Kerry TJ 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 Kerry TJ Logistics, you can compare the effects of market volatilities on U Ming and Kerry TJ 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 Kerry TJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Kerry TJ.
Diversification Opportunities for U Ming and Kerry TJ
Very weak diversification
The 3 months correlation between 2606 and Kerry is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Kerry TJ Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kerry TJ Logistics 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 Kerry TJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kerry TJ Logistics has no effect on the direction of U Ming i.e., U Ming and Kerry TJ go up and down completely randomly.
Pair Corralation between U Ming and Kerry TJ
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 2.33 times more return on investment than Kerry TJ. However, U Ming is 2.33 times more volatile than Kerry TJ Logistics. It trades about 0.05 of its potential returns per unit of risk. Kerry TJ Logistics is currently generating about 0.03 per unit of risk. If you would invest 4,350 in U Ming Marine Transport on September 12, 2024 and sell it today you would earn a total of 1,440 from holding U Ming Marine Transport or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Kerry TJ Logistics
Performance |
| Timeline |
| U Ming Marine |
| Kerry TJ Logistics |
U Ming and Kerry TJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Kerry TJ
The main advantage of trading using opposite U Ming and Kerry TJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Kerry TJ 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 Kerry TJ will offset losses from the drop in Kerry TJ'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 |
| Kerry TJ vs. Yang Ming Marine | Kerry TJ vs. Wan Hai Lines | Kerry TJ vs. U Ming Marine Transport | Kerry TJ 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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