Correlation Between Yang Ming and Infortrend Technology
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Infortrend Technology 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 Infortrend Technology 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 Infortrend Technology, you can compare the effects of market volatilities on Yang Ming and Infortrend Technology 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 Infortrend Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Infortrend Technology.
Diversification Opportunities for Yang Ming and Infortrend Technology
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and Infortrend is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Infortrend Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infortrend Technology 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 Infortrend Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infortrend Technology has no effect on the direction of Yang Ming i.e., Yang Ming and Infortrend Technology go up and down completely randomly.
Pair Corralation between Yang Ming and Infortrend Technology
Assuming the 90 days trading horizon Yang Ming is expected to generate 5.71 times less return on investment than Infortrend Technology. But when comparing it to its historical volatility, Yang Ming Marine is 1.44 times less risky than Infortrend Technology. It trades about 0.02 of its potential returns per unit of risk. Infortrend Technology is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,810 in Infortrend Technology on August 24, 2024 and sell it today you would earn a total of 800.00 from holding Infortrend Technology or generate 28.47% 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. Infortrend Technology
Performance |
| Timeline |
| Yang Ming Marine |
| Infortrend Technology |
Yang Ming and Infortrend Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Infortrend Technology
The main advantage of trading using opposite Yang Ming and Infortrend Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Infortrend Technology 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 Infortrend Technology will offset losses from the drop in Infortrend Technology'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 |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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