Correlation Between Yang Ming and StShine Optical
Can any of the company-specific risk be diversified away by investing in both Yang Ming and StShine Optical 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 StShine Optical 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 StShine Optical Co, you can compare the effects of market volatilities on Yang Ming and StShine Optical 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 StShine Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and StShine Optical.
Diversification Opportunities for Yang Ming and StShine Optical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and StShine is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and StShine Optical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StShine Optical 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 StShine Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StShine Optical has no effect on the direction of Yang Ming i.e., Yang Ming and StShine Optical go up and down completely randomly.
Pair Corralation between Yang Ming and StShine Optical
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.85 times more return on investment than StShine Optical. However, Yang Ming is 1.85 times more volatile than StShine Optical Co. It trades about 0.09 of its potential returns per unit of risk. StShine Optical Co is currently generating about 0.06 per unit of risk. If you would invest 4,860 in Yang Ming Marine on September 1, 2024 and sell it today you would earn a total of 2,460 from holding Yang Ming Marine or generate 50.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Yang Ming Marine vs. StShine Optical Co
Performance |
| Timeline |
| Yang Ming Marine |
| StShine Optical |
Yang Ming and StShine Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and StShine Optical
The main advantage of trading using opposite Yang Ming and StShine Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, StShine Optical 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 StShine Optical will offset losses from the drop in StShine Optical'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 |
| StShine Optical vs. Emerging Display Technologies | StShine Optical vs. Far EasTone Telecommunications | StShine Optical vs. Century Iron And | StShine Optical vs. TMP Steel |
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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