Correlation Between Yang Ming and Taiwan Navigation
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Taiwan Navigation 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 Taiwan Navigation 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 Taiwan Navigation Co, you can compare the effects of market volatilities on Yang Ming and Taiwan Navigation 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 Taiwan Navigation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Taiwan Navigation.
Diversification Opportunities for Yang Ming and Taiwan Navigation
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yang and Taiwan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Taiwan Navigation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Navigation 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 Taiwan Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Navigation has no effect on the direction of Yang Ming i.e., Yang Ming and Taiwan Navigation go up and down completely randomly.
Pair Corralation between Yang Ming and Taiwan Navigation
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.81 times more return on investment than Taiwan Navigation. However, Yang Ming is 1.81 times more volatile than Taiwan Navigation Co. It trades about 0.07 of its potential returns per unit of risk. Taiwan Navigation Co is currently generating about -0.02 per unit of risk. If you would invest 4,665 in Yang Ming Marine on November 4, 2024 and sell it today you would earn a total of 2,115 from holding Yang Ming Marine or generate 45.34% 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. Taiwan Navigation Co
Performance |
| Timeline |
| Yang Ming Marine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Taiwan Navigation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yang Ming and Taiwan Navigation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Taiwan Navigation
The main advantage of trading using opposite Yang Ming and Taiwan Navigation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Taiwan Navigation 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 Taiwan Navigation will offset losses from the drop in Taiwan Navigation's long position.The idea behind Yang Ming Marine and Taiwan Navigation Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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