Correlation Between Kerry TJ and U Ming
Can any of the company-specific risk be diversified away by investing in both Kerry TJ and U Ming 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 Kerry TJ and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry TJ Logistics and U Ming Marine Transport, you can compare the effects of market volatilities on Kerry TJ and U Ming 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 Kerry TJ with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry TJ and U Ming.
Diversification Opportunities for Kerry TJ and U Ming
Significant diversification
The 3 months correlation between Kerry and 2606 is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Kerry TJ Logistics and U Ming Marine Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Ming Marine and Kerry TJ 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 Kerry TJ Logistics are associated (or correlated) with U Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Ming Marine has no effect on the direction of Kerry TJ i.e., Kerry TJ and U Ming go up and down completely randomly.
Pair Corralation between Kerry TJ and U Ming
Assuming the 90 days trading horizon Kerry TJ Logistics is expected to under-perform the U Ming. But the stock apears to be less risky and, when comparing its historical volatility, Kerry TJ Logistics is 4.48 times less risky than U Ming. The stock trades about -0.03 of its potential returns per unit of risk. The U Ming Marine Transport is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,760 in U Ming Marine Transport on November 5, 2024 and sell it today you would lose (10.00) from holding U Ming Marine Transport or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kerry TJ Logistics vs. U Ming Marine Transport
Performance |
| Timeline |
| Kerry TJ Logistics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| U Ming Marine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Kerry TJ and U Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kerry TJ and U Ming
The main advantage of trading using opposite Kerry TJ and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry TJ position performs unexpectedly, U Ming 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 U Ming will offset losses from the drop in U Ming's long position.The idea behind Kerry TJ Logistics and U Ming Marine Transport pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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