Correlation Between U Ming and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both U Ming and Chien Kuo 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 Chien Kuo 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 Chien Kuo Construction, you can compare the effects of market volatilities on U Ming and Chien Kuo 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 Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Chien Kuo.
Diversification Opportunities for U Ming and Chien Kuo
Poor diversification
The 3 months correlation between 2606 and Chien is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction 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 Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of U Ming i.e., U Ming and Chien Kuo go up and down completely randomly.
Pair Corralation between U Ming and Chien Kuo
Assuming the 90 days trading horizon U Ming Marine Transport is expected to under-perform the Chien Kuo. But the stock apears to be less risky and, when comparing its historical volatility, U Ming Marine Transport is 1.92 times less risky than Chien Kuo. The stock trades about -0.06 of its potential returns per unit of risk. The Chien Kuo Construction is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,540 in Chien Kuo Construction on September 12, 2024 and sell it today you would earn a total of 215.00 from holding Chien Kuo Construction or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Chien Kuo Construction
Performance |
| Timeline |
| U Ming Marine |
| Chien Kuo Construction |
U Ming and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Chien Kuo
The main advantage of trading using opposite U Ming and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo'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 |
| Chien Kuo vs. Yang Ming Marine | Chien Kuo vs. Wan Hai Lines | Chien Kuo vs. U Ming Marine Transport | Chien Kuo 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 Stocks Directory module to find actively traded stocks across global markets.
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