Correlation Between Yang Ming and New Asia
Can any of the company-specific risk be diversified away by investing in both Yang Ming and New Asia 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 New Asia 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 New Asia Construction, you can compare the effects of market volatilities on Yang Ming and New Asia 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 New Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and New Asia.
Diversification Opportunities for Yang Ming and New Asia
Pay attention - limited upside
The 3 months correlation between Yang and New is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and New Asia Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Asia Construction 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 New Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Asia Construction has no effect on the direction of Yang Ming i.e., Yang Ming and New Asia go up and down completely randomly.
Pair Corralation between Yang Ming and New Asia
Assuming the 90 days trading horizon Yang Ming Marine is expected to under-perform the New Asia. But the stock apears to be less risky and, when comparing its historical volatility, Yang Ming Marine is 2.23 times less risky than New Asia. The stock trades about -0.06 of its potential returns per unit of risk. The New Asia Construction is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,410 in New Asia Construction on December 2, 2024 and sell it today you would earn a total of 875.00 from holding New Asia Construction or generate 62.06% 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. New Asia Construction
Performance |
| Timeline |
| Yang Ming Marine |
| New Asia Construction |
Yang Ming and New Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and New Asia
The main advantage of trading using opposite Yang Ming and New Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, New Asia 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 New Asia will offset losses from the drop in New Asia'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 |
| New Asia vs. BES Engineering Co | New Asia vs. Delpha Construction Co | New Asia vs. Cathay Real Estate | New Asia vs. Da Cin Construction Co |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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