Correlation Between Yang Ming and Orient Semiconductor
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Orient Semiconductor 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 Orient Semiconductor 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 Orient Semiconductor Electronics, you can compare the effects of market volatilities on Yang Ming and Orient Semiconductor 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 Orient Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Orient Semiconductor.
Diversification Opportunities for Yang Ming and Orient Semiconductor
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Orient is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Orient Semiconductor Electroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Semiconductor 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 Orient Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Semiconductor has no effect on the direction of Yang Ming i.e., Yang Ming and Orient Semiconductor go up and down completely randomly.
Pair Corralation between Yang Ming and Orient Semiconductor
Assuming the 90 days trading horizon Yang Ming is expected to generate 1.39 times less return on investment than Orient Semiconductor. But when comparing it to its historical volatility, Yang Ming Marine is 1.2 times less risky than Orient Semiconductor. It trades about 0.05 of its potential returns per unit of risk. Orient Semiconductor Electronics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,820 in Orient Semiconductor Electronics on September 3, 2024 and sell it today you would earn a total of 1,740 from holding Orient Semiconductor Electronics or generate 95.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Orient Semiconductor Electroni
Performance |
| Timeline |
| Yang Ming Marine |
| Orient Semiconductor |
Yang Ming and Orient Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Orient Semiconductor
The main advantage of trading using opposite Yang Ming and Orient Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Orient Semiconductor 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 Orient Semiconductor will offset losses from the drop in Orient Semiconductor'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 |
| Orient Semiconductor vs. Taiwan Semiconductor Manufacturing | Orient Semiconductor vs. Yang Ming Marine | Orient Semiconductor vs. ASE Industrial Holding | Orient Semiconductor vs. AU Optronics |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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