Correlation Between U Ming and Trade Van
Can any of the company-specific risk be diversified away by investing in both U Ming and Trade Van 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 Trade Van 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 Trade Van Information Services, you can compare the effects of market volatilities on U Ming and Trade Van 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 Trade Van. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Trade Van.
Diversification Opportunities for U Ming and Trade Van
Very poor diversification
The 3 months correlation between 2606 and Trade is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Trade Van Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Van Information 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 Trade Van. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Van Information has no effect on the direction of U Ming i.e., U Ming and Trade Van go up and down completely randomly.
Pair Corralation between U Ming and Trade Van
Assuming the 90 days trading horizon U Ming is expected to generate 2.62 times less return on investment than Trade Van. In addition to that, U Ming is 2.07 times more volatile than Trade Van Information Services. It trades about 0.02 of its total potential returns per unit of risk. Trade Van Information Services is currently generating about 0.08 per unit of volatility. If you would invest 7,400 in Trade Van Information Services on August 29, 2024 and sell it today you would earn a total of 740.00 from holding Trade Van Information Services or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Trade Van Information Services
Performance |
| Timeline |
| U Ming Marine |
| Trade Van Information |
U Ming and Trade Van Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Trade Van
The main advantage of trading using opposite U Ming and Trade Van positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Trade Van 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 Trade Van will offset losses from the drop in Trade Van'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 |
| Trade Van vs. Sitronix Technology Corp | Trade Van vs. Elan Microelectronics Corp | Trade Van vs. Global Unichip Corp | Trade Van vs. Holtek Semiconductor |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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