Correlation Between Yang Ming and Inventec Corp
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Inventec Corp 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 Inventec Corp 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 Inventec Corp, you can compare the effects of market volatilities on Yang Ming and Inventec Corp 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 Inventec Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Inventec Corp.
Diversification Opportunities for Yang Ming and Inventec Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and Inventec is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Inventec Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventec Corp 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 Inventec Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventec Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Inventec Corp go up and down completely randomly.
Pair Corralation between Yang Ming and Inventec Corp
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.73 times more return on investment than Inventec Corp. However, Yang Ming Marine is 1.38 times less risky than Inventec Corp. It trades about 0.19 of its potential returns per unit of risk. Inventec Corp is currently generating about 0.11 per unit of risk. If you would invest 6,810 in Yang Ming Marine on September 4, 2024 and sell it today you would earn a total of 620.00 from holding Yang Ming Marine or generate 9.1% 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. Inventec Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Inventec Corp |
Yang Ming and Inventec Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Inventec Corp
The main advantage of trading using opposite Yang Ming and Inventec Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Inventec Corp 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 Inventec Corp will offset losses from the drop in Inventec Corp'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 |
| Inventec Corp vs. Compal Electronics | Inventec Corp vs. Quanta Computer | Inventec Corp vs. Wistron Corp | Inventec Corp vs. Lite On Technology Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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