Correlation Between Yang Ming and Pan International
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Pan International 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 Pan International 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 Pan International Industrial Corp, you can compare the effects of market volatilities on Yang Ming and Pan International 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 Pan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Pan International.
Diversification Opportunities for Yang Ming and Pan International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and Pan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Pan International Industrial C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan International 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 Pan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan International has no effect on the direction of Yang Ming i.e., Yang Ming and Pan International go up and down completely randomly.
Pair Corralation between Yang Ming and Pan International
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.43 times more return on investment than Pan International. However, Yang Ming is 1.43 times more volatile than Pan International Industrial Corp. It trades about 0.19 of its potential returns per unit of risk. Pan International Industrial Corp is currently generating about -0.17 per unit of risk. If you would invest 7,180 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 870.00 from holding Yang Ming Marine or generate 12.12% 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. Pan International Industrial C
Performance |
| Timeline |
| Yang Ming Marine |
| Pan International |
Yang Ming and Pan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Pan International
The main advantage of trading using opposite Yang Ming and Pan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Pan International 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 Pan International will offset losses from the drop in Pan International'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 |
| Pan International vs. Hunya Foods Co | Pan International vs. Hi Lai Foods Co | Pan International vs. Sunspring Metal Corp | Pan International vs. Lian Hwa Foods |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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