Correlation Between Yang Ming and Allis Electric
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Allis Electric 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 Yang Ming and Allis Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yang Ming Marine and Allis Electric Co, you can compare the effects of market volatilities on Yang Ming and Allis Electric 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 Yang Ming with a short position of Allis Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Allis Electric.
Diversification Opportunities for Yang Ming and Allis Electric
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yang and Allis is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Allis Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allis Electric and Yang 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 Yang Ming Marine are associated (or correlated) with Allis Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allis Electric has no effect on the direction of Yang Ming i.e., Yang Ming and Allis Electric go up and down completely randomly.
Pair Corralation between Yang Ming and Allis Electric
Assuming the 90 days trading horizon Yang Ming is expected to generate 1.17 times less return on investment than Allis Electric. But when comparing it to its historical volatility, Yang Ming Marine is 1.24 times less risky than Allis Electric. It trades about 0.08 of its potential returns per unit of risk. Allis Electric Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,391 in Allis Electric Co on September 12, 2024 and sell it today you would earn a total of 5,309 from holding Allis Electric Co or generate 98.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Allis Electric Co
Performance |
| Timeline |
| Yang Ming Marine |
| Allis Electric |
Yang Ming and Allis Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Allis Electric
The main advantage of trading using opposite Yang Ming and Allis Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Allis Electric 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 Allis Electric will offset losses from the drop in Allis Electric's long position.| Yang Ming vs. Evergreen Marine Corp | Yang Ming vs. Wan Hai Lines | Yang Ming vs. China Airlines | Yang Ming vs. Eva Airways Corp |
| Allis Electric vs. Yang Ming Marine | Allis Electric vs. Wan Hai Lines | Allis Electric vs. U Ming Marine Transport | Allis Electric 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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