Correlation Between Yang Ming and Tze Shin
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Tze Shin 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 Tze Shin 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 Tze Shin International, you can compare the effects of market volatilities on Yang Ming and Tze Shin 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 Tze Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Tze Shin.
Diversification Opportunities for Yang Ming and Tze Shin
Very good diversification
The 3 months correlation between Yang and Tze is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Tze Shin International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tze Shin International 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 Tze Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tze Shin International has no effect on the direction of Yang Ming i.e., Yang Ming and Tze Shin go up and down completely randomly.
Pair Corralation between Yang Ming and Tze Shin
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.13 times more return on investment than Tze Shin. However, Yang Ming is 1.13 times more volatile than Tze Shin International. It trades about 0.05 of its potential returns per unit of risk. Tze Shin International is currently generating about 0.05 per unit of risk. If you would invest 4,838 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 3,212 from holding Yang Ming Marine or generate 66.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Tze Shin International
Performance |
| Timeline |
| Yang Ming Marine |
| Tze Shin International |
Yang Ming and Tze Shin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Tze Shin
The main advantage of trading using opposite Yang Ming and Tze Shin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Tze Shin 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 Tze Shin will offset losses from the drop in Tze Shin'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 |
| Tze Shin vs. Yang Ming Marine | Tze Shin vs. Wan Hai Lines | Tze Shin vs. U Ming Marine Transport | Tze Shin vs. Taiwan Navigation 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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