Correlation Between Yang Ming and Elan Microelectronics
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Elan Microelectronics 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 Elan Microelectronics 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 Elan Microelectronics Corp, you can compare the effects of market volatilities on Yang Ming and Elan Microelectronics 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 Elan Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Elan Microelectronics.
Diversification Opportunities for Yang Ming and Elan Microelectronics
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yang and Elan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Elan Microelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elan Microelectronics 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 Elan Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elan Microelectronics has no effect on the direction of Yang Ming i.e., Yang Ming and Elan Microelectronics go up and down completely randomly.
Pair Corralation between Yang Ming and Elan Microelectronics
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.19 times more return on investment than Elan Microelectronics. However, Yang Ming is 1.19 times more volatile than Elan Microelectronics Corp. It trades about 0.06 of its potential returns per unit of risk. Elan Microelectronics Corp is currently generating about 0.06 per unit of risk. If you would invest 4,411 in Yang Ming Marine on September 4, 2024 and sell it today you would earn a total of 3,019 from holding Yang Ming Marine or generate 68.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Yang Ming Marine vs. Elan Microelectronics Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Elan Microelectronics |
Yang Ming and Elan Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Elan Microelectronics
The main advantage of trading using opposite Yang Ming and Elan Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Elan Microelectronics 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 Elan Microelectronics will offset losses from the drop in Elan Microelectronics' 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 |
| Elan Microelectronics vs. Taiwan Semiconductor Manufacturing | Elan Microelectronics vs. Yang Ming Marine | Elan Microelectronics vs. AU Optronics | Elan Microelectronics vs. Innolux 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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