Correlation Between U Ming and Forest Water
Can any of the company-specific risk be diversified away by investing in both U Ming and Forest Water 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 Forest Water 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 Forest Water Environmental, you can compare the effects of market volatilities on U Ming and Forest Water 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 Forest Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Forest Water.
Diversification Opportunities for U Ming and Forest Water
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 2606 and Forest is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Forest Water Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forest Water Environ 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 Forest Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forest Water Environ has no effect on the direction of U Ming i.e., U Ming and Forest Water go up and down completely randomly.
Pair Corralation between U Ming and Forest Water
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.69 times more return on investment than Forest Water. However, U Ming Marine Transport is 1.45 times less risky than Forest Water. It trades about 0.02 of its potential returns per unit of risk. Forest Water Environmental is currently generating about 0.0 per unit of risk. If you would invest 5,580 in U Ming Marine Transport on September 14, 2024 and sell it today you would earn a total of 130.00 from holding U Ming Marine Transport or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
U Ming Marine Transport vs. Forest Water Environmental
Performance |
| Timeline |
| U Ming Marine |
| Forest Water Environ |
U Ming and Forest Water Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with U Ming and Forest Water
The main advantage of trading using opposite U Ming and Forest Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, Forest Water 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 Forest Water will offset losses from the drop in Forest Water'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 |
| Forest Water vs. Yang Ming Marine | Forest Water vs. Wan Hai Lines | Forest Water vs. U Ming Marine Transport | Forest Water 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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