Correlation Between Yang Ming and Loop Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Loop Telecommunicatio 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 Loop Telecommunicatio 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 Loop Telecommunication International, you can compare the effects of market volatilities on Yang Ming and Loop Telecommunicatio 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 Loop Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Loop Telecommunicatio.
Diversification Opportunities for Yang Ming and Loop Telecommunicatio
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Yang and Loop is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Loop Telecommunication Interna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Telecommunication 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 Loop Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Telecommunication has no effect on the direction of Yang Ming i.e., Yang Ming and Loop Telecommunicatio go up and down completely randomly.
Pair Corralation between Yang Ming and Loop Telecommunicatio
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.99 times more return on investment than Loop Telecommunicatio. However, Yang Ming Marine is 1.01 times less risky than Loop Telecommunicatio. It trades about 0.1 of its potential returns per unit of risk. Loop Telecommunication International is currently generating about 0.03 per unit of risk. If you would invest 5,060 in Yang Ming Marine on September 3, 2024 and sell it today you would earn a total of 2,260 from holding Yang Ming Marine or generate 44.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Loop Telecommunication Interna
Performance |
| Timeline |
| Yang Ming Marine |
| Loop Telecommunication |
Yang Ming and Loop Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Loop Telecommunicatio
The main advantage of trading using opposite Yang Ming and Loop Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Loop Telecommunicatio 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 Loop Telecommunicatio will offset losses from the drop in Loop Telecommunicatio'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 |
| Loop Telecommunicatio vs. Taiwan Semiconductor Manufacturing | Loop Telecommunicatio vs. Yang Ming Marine | Loop Telecommunicatio vs. ASE Industrial Holding | Loop Telecommunicatio 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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