Correlation Between Yang Ming and Farcent Enterprise
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Farcent Enterprise 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 Farcent Enterprise 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 Farcent Enterprise Co, you can compare the effects of market volatilities on Yang Ming and Farcent Enterprise 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 Farcent Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Farcent Enterprise.
Diversification Opportunities for Yang Ming and Farcent Enterprise
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yang and Farcent is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Farcent Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farcent Enterprise 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 Farcent Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farcent Enterprise has no effect on the direction of Yang Ming i.e., Yang Ming and Farcent Enterprise go up and down completely randomly.
Pair Corralation between Yang Ming and Farcent Enterprise
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 6.6 times more return on investment than Farcent Enterprise. However, Yang Ming is 6.6 times more volatile than Farcent Enterprise Co. It trades about 0.16 of its potential returns per unit of risk. Farcent Enterprise Co is currently generating about 0.04 per unit of risk. If you would invest 6,200 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 1,720 from holding Yang Ming Marine or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Yang Ming Marine vs. Farcent Enterprise Co
Performance |
| Timeline |
| Yang Ming Marine |
| Farcent Enterprise |
Yang Ming and Farcent Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Farcent Enterprise
The main advantage of trading using opposite Yang Ming and Farcent Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Farcent Enterprise 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 Farcent Enterprise will offset losses from the drop in Farcent Enterprise'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 |
| Farcent Enterprise vs. Charoen Pokphand Enterprise | Farcent Enterprise vs. Yung Chi Paint | Farcent Enterprise vs. TTET Union Corp | Farcent Enterprise vs. Taiwan Secom 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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