Correlation Between Yang Ming and Zenitron Corp
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Zenitron Corp 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 Zenitron Corp 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 Zenitron Corp, you can compare the effects of market volatilities on Yang Ming and Zenitron Corp 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 Zenitron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Zenitron Corp.
Diversification Opportunities for Yang Ming and Zenitron Corp
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Zenitron is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Zenitron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zenitron Corp 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 Zenitron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zenitron Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Zenitron Corp go up and down completely randomly.
Pair Corralation between Yang Ming and Zenitron Corp
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.42 times more return on investment than Zenitron Corp. However, Yang Ming is 2.42 times more volatile than Zenitron Corp. It trades about 0.06 of its potential returns per unit of risk. Zenitron Corp is currently generating about 0.02 per unit of risk. If you would invest 4,624 in Yang Ming Marine on September 14, 2024 and sell it today you would earn a total of 3,236 from holding Yang Ming Marine or generate 69.98% 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. Zenitron Corp
Performance |
Timeline |
Yang Ming Marine |
Zenitron Corp |
Yang Ming and Zenitron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yang Ming and Zenitron Corp
The main advantage of trading using opposite Yang Ming and Zenitron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Zenitron Corp 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 Zenitron Corp will offset losses from the drop in Zenitron Corp's long position.Yang Ming vs. Wan Hai Lines | Yang Ming vs. U Ming Marine Transport | Yang Ming vs. Taiwan Navigation Co | Yang Ming vs. China Airlines |
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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