Correlation Between U Ming and First Insurance
Can any of the company-specific risk be diversified away by investing in both U Ming and First Insurance 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 Insurance 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 Insurance Co, you can compare the effects of market volatilities on U Ming and First Insurance 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 Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and First Insurance.
Diversification Opportunities for U Ming and First Insurance
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 2606 and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and First Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Insurance 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 Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Insurance has no effect on the direction of U Ming i.e., U Ming and First Insurance go up and down completely randomly.
Pair Corralation between U Ming and First Insurance
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 3.43 times more return on investment than First Insurance. However, U Ming is 3.43 times more volatile than First Insurance Co. It trades about 0.38 of its potential returns per unit of risk. First Insurance Co is currently generating about 0.54 per unit of risk. If you would invest 5,650 in U Ming Marine Transport on November 28, 2024 and sell it today you would earn a total of 1,580 from holding U Ming Marine Transport or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
U Ming Marine Transport vs. First Insurance Co
Performance |
| Timeline |
| U Ming Marine |
| First Insurance |
U Ming and First Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and First Insurance
The main advantage of trading using opposite U Ming and First Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, First Insurance 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 Insurance will offset losses from the drop in First Insurance'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 Insurance vs. EnTie Commercial Bank | First Insurance vs. Union Bank of | First Insurance vs. Bank of Kaohsiung | First Insurance vs. Taiwan Business Bank |
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.
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