Correlation Between U Ming and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both U Ming and Leader Electronics 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 Leader Electronics 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 Leader Electronics, you can compare the effects of market volatilities on U Ming and Leader Electronics 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 Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Leader Electronics.
Diversification Opportunities for U Ming and Leader Electronics
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2606 and Leader is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics 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 Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of U Ming i.e., U Ming and Leader Electronics go up and down completely randomly.
Pair Corralation between U Ming and Leader Electronics
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.76 times more return on investment than Leader Electronics. However, U Ming Marine Transport is 1.32 times less risky than Leader Electronics. It trades about 0.1 of its potential returns per unit of risk. Leader Electronics is currently generating about -0.14 per unit of risk. If you would invest 5,450 in U Ming Marine Transport on September 13, 2024 and sell it today you would earn a total of 270.00 from holding U Ming Marine Transport or generate 4.95% 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. Leader Electronics
Performance |
| Timeline |
| U Ming Marine |
| Leader Electronics |
U Ming and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Leader Electronics
The main advantage of trading using opposite U Ming and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' 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 |
| Leader Electronics vs. Yang Ming Marine | Leader Electronics vs. Wan Hai Lines | Leader Electronics vs. U Ming Marine Transport | Leader Electronics 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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