Correlation Between Yang Ming and Kenda Rubber
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Kenda Rubber 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 Kenda Rubber 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 Kenda Rubber Industrial, you can compare the effects of market volatilities on Yang Ming and Kenda Rubber 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 Kenda Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Kenda Rubber.
Diversification Opportunities for Yang Ming and Kenda Rubber
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Kenda is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Kenda Rubber Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kenda Rubber Industrial 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 Kenda Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kenda Rubber Industrial has no effect on the direction of Yang Ming i.e., Yang Ming and Kenda Rubber go up and down completely randomly.
Pair Corralation between Yang Ming and Kenda Rubber
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.12 times more return on investment than Kenda Rubber. However, Yang Ming is 2.12 times more volatile than Kenda Rubber Industrial. It trades about 0.0 of its potential returns per unit of risk. Kenda Rubber Industrial is currently generating about -0.11 per unit of risk. If you would invest 7,570 in Yang Ming Marine on September 2, 2024 and sell it today you would lose (250.00) from holding Yang Ming Marine or give up 3.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Kenda Rubber Industrial
Performance |
| Timeline |
| Yang Ming Marine |
| Kenda Rubber Industrial |
Yang Ming and Kenda Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Kenda Rubber
The main advantage of trading using opposite Yang Ming and Kenda Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Kenda Rubber 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 Kenda Rubber will offset losses from the drop in Kenda Rubber'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 |
| Kenda Rubber vs. Chaintech Technology Corp | Kenda Rubber vs. Avision | Kenda Rubber vs. Clevo Co | Kenda Rubber vs. Elitegroup Computer Systems |
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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