Correlation Between Yang Ming and Century Wind
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Century Wind 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 Century Wind 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 Century Wind Power, you can compare the effects of market volatilities on Yang Ming and Century Wind 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 Century Wind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Century Wind.
Diversification Opportunities for Yang Ming and Century Wind
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yang and Century is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Century Wind Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Wind Power 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 Century Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Wind Power has no effect on the direction of Yang Ming i.e., Yang Ming and Century Wind go up and down completely randomly.
Pair Corralation between Yang Ming and Century Wind
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.63 times more return on investment than Century Wind. However, Yang Ming is 2.63 times more volatile than Century Wind Power. It trades about 0.28 of its potential returns per unit of risk. Century Wind Power is currently generating about -0.08 per unit of risk. If you would invest 6,810 in Yang Ming Marine on August 27, 2024 and sell it today you would earn a total of 940.00 from holding Yang Ming Marine or generate 13.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Century Wind Power
Performance |
| Timeline |
| Yang Ming Marine |
| Century Wind Power |
Yang Ming and Century Wind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Century Wind
The main advantage of trading using opposite Yang Ming and Century Wind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Century Wind 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 Century Wind will offset losses from the drop in Century Wind'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 |
| Century Wind vs. United Integrated Services | Century Wind vs. CTCI Corp | Century Wind vs. Ruentex Engineering Construction | Century Wind vs. BES Engineering 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 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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