Correlation Between Yang Ming and Chin Poon
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Chin Poon 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 Chin Poon 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 Chin Poon Industrial Co, you can compare the effects of market volatilities on Yang Ming and Chin Poon 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 Chin Poon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Chin Poon.
Diversification Opportunities for Yang Ming and Chin Poon
Very good diversification
The 3 months correlation between Yang and Chin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Chin Poon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chin Poon 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 Chin Poon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chin Poon Industrial has no effect on the direction of Yang Ming i.e., Yang Ming and Chin Poon go up and down completely randomly.
Pair Corralation between Yang Ming and Chin Poon
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.94 times more return on investment than Chin Poon. However, Yang Ming is 1.94 times more volatile than Chin Poon Industrial Co. It trades about 0.16 of its potential returns per unit of risk. Chin Poon Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 6,200 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 1,720 from holding Yang Ming Marine or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Chin Poon Industrial Co
Performance |
| Timeline |
| Yang Ming Marine |
| Chin Poon Industrial |
Yang Ming and Chin Poon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Chin Poon
The main advantage of trading using opposite Yang Ming and Chin Poon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Chin Poon 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 Chin Poon will offset losses from the drop in Chin Poon'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 |
| Chin Poon vs. Compeq Manufacturing Co | Chin Poon vs. Unitech Printed Circuit | Chin Poon vs. Gold Circuit Electronics | Chin Poon vs. WUS Printed Circuit |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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