Correlation Between Yang Ming and Ta Chen
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Ta Chen 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 Ta Chen 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 Ta Chen Stainless, you can compare the effects of market volatilities on Yang Ming and Ta Chen 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 Ta Chen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Ta Chen.
Diversification Opportunities for Yang Ming and Ta Chen
Significant diversification
The 3 months correlation between Yang and 2027 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Ta Chen Stainless in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Chen Stainless 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 Ta Chen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Chen Stainless has no effect on the direction of Yang Ming i.e., Yang Ming and Ta Chen go up and down completely randomly.
Pair Corralation between Yang Ming and Ta Chen
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.64 times more return on investment than Ta Chen. However, Yang Ming is 1.64 times more volatile than Ta Chen Stainless. It trades about 0.06 of its potential returns per unit of risk. Ta Chen Stainless is currently generating about -0.02 per unit of risk. If you would invest 4,304 in Yang Ming Marine on August 30, 2024 and sell it today you would earn a total of 2,866 from holding Yang Ming Marine or generate 66.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Yang Ming Marine vs. Ta Chen Stainless
Performance |
| Timeline |
| Yang Ming Marine |
| Ta Chen Stainless |
Yang Ming and Ta Chen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Ta Chen
The main advantage of trading using opposite Yang Ming and Ta Chen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Ta Chen 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 Ta Chen will offset losses from the drop in Ta Chen's long position.| Yang Ming vs. Yulon Motor Co | Yang Ming vs. Far Eastern Department | Yang Ming vs. China Steel Corp | Yang Ming vs. Chang Hwa Commercial |
| Ta Chen vs. Chung Hung Steel | Ta Chen vs. China Steel Corp | Ta Chen vs. Tung Ho Steel | Ta Chen vs. Yang Ming Marine |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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