Correlation Between U Ming and Far EasTone
Can any of the company-specific risk be diversified away by investing in both U Ming and Far EasTone 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 Far EasTone 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 Far EasTone Telecommunications, you can compare the effects of market volatilities on U Ming and Far EasTone 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 Far EasTone. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Far EasTone.
Diversification Opportunities for U Ming and Far EasTone
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 2606 and Far is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Far EasTone Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far EasTone Telecomm 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 Far EasTone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far EasTone Telecomm has no effect on the direction of U Ming i.e., U Ming and Far EasTone go up and down completely randomly.
Pair Corralation between U Ming and Far EasTone
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 2.19 times more return on investment than Far EasTone. However, U Ming is 2.19 times more volatile than Far EasTone Telecommunications. It trades about 0.04 of its potential returns per unit of risk. Far EasTone Telecommunications is currently generating about 0.06 per unit of risk. If you would invest 4,625 in U Ming Marine Transport on August 26, 2024 and sell it today you would earn a total of 1,475 from holding U Ming Marine Transport or generate 31.89% 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. Far EasTone Telecommunications
Performance |
| Timeline |
| U Ming Marine |
| Far EasTone Telecomm |
U Ming and Far EasTone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Far EasTone
The main advantage of trading using opposite U Ming and Far EasTone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Far EasTone 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 Far EasTone will offset losses from the drop in Far EasTone'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 |
| Far EasTone vs. Chunghwa Telecom Co | Far EasTone vs. CTBC Financial Holding | Far EasTone vs. Fubon Financial Holding | Far EasTone vs. President Chain Store |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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