Correlation Between Yang Ming and Ares International
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Ares 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 Ares 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 Ares International Corp, you can compare the effects of market volatilities on Yang Ming and Ares 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 Ares International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Ares International.
Diversification Opportunities for Yang Ming and Ares International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yang and Ares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Ares International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares International 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 Ares International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares International Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Ares International go up and down completely randomly.
Pair Corralation between Yang Ming and Ares International
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.36 times more return on investment than Ares International. However, Yang Ming is 2.36 times more volatile than Ares International Corp. It trades about 0.12 of its potential returns per unit of risk. Ares International Corp is currently generating about -0.14 per unit of risk. If you would invest 6,180 in Yang Ming Marine on September 3, 2024 and sell it today you would earn a total of 1,140 from holding Yang Ming Marine or generate 18.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Ares International Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Ares International Corp |
Yang Ming and Ares International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Ares International
The main advantage of trading using opposite Yang Ming and Ares International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Ares 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 Ares International will offset losses from the drop in Ares 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 |
| Ares International vs. Taiwan Semiconductor Manufacturing | Ares International vs. Yang Ming Marine | Ares International vs. ASE Industrial Holding | Ares International 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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