Correlation Between Yang Ming and Chia Ta
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Chia Ta 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 Chia Ta 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 Chia Ta World, you can compare the effects of market volatilities on Yang Ming and Chia Ta 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 Chia Ta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Chia Ta.
Diversification Opportunities for Yang Ming and Chia Ta
Poor diversification
The 3 months correlation between Yang and Chia is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Chia Ta World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Ta World 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 Chia Ta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Ta World has no effect on the direction of Yang Ming i.e., Yang Ming and Chia Ta go up and down completely randomly.
Pair Corralation between Yang Ming and Chia Ta
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.74 times more return on investment than Chia Ta. However, Yang Ming Marine is 1.35 times less risky than Chia Ta. It trades about 0.31 of its potential returns per unit of risk. Chia Ta World is currently generating about -0.13 per unit of risk. If you would invest 6,850 in Yang Ming Marine on August 24, 2024 and sell it today you would earn a total of 1,080 from holding Yang Ming Marine or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Chia Ta World
Performance |
| Timeline |
| Yang Ming Marine |
| Chia Ta World |
Yang Ming and Chia Ta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Chia Ta
The main advantage of trading using opposite Yang Ming and Chia Ta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Chia Ta 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 Chia Ta will offset losses from the drop in Chia Ta's long position.| Yang Ming vs. Sunny Friend Environmental | Yang Ming vs. Taiwan Secom Co | Yang Ming vs. TTET Union Corp | Yang Ming vs. ECOVE Environment Corp |
| Chia Ta vs. Chun Yuan Steel | Chia Ta vs. Chun Yu Works | Chia Ta vs. China Steel Structure | Chia Ta vs. Chih Lien Industrial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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