Correlation Between Yang Ming and AOPEN
Can any of the company-specific risk be diversified away by investing in both Yang Ming and AOPEN 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 AOPEN 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 AOPEN Inc, you can compare the effects of market volatilities on Yang Ming and AOPEN 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 AOPEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and AOPEN.
Diversification Opportunities for Yang Ming and AOPEN
Excellent diversification
The 3 months correlation between Yang and AOPEN is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and AOPEN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AOPEN Inc 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 AOPEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AOPEN Inc has no effect on the direction of Yang Ming i.e., Yang Ming and AOPEN go up and down completely randomly.
Pair Corralation between Yang Ming and AOPEN
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.34 times more return on investment than AOPEN. However, Yang Ming is 2.34 times more volatile than AOPEN Inc. It trades about 0.16 of its potential returns per unit of risk. AOPEN Inc is currently generating about -0.13 per unit of risk. If you would invest 6,200 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 1,720 from holding Yang Ming Marine or generate 27.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. AOPEN Inc
Performance |
| Timeline |
| Yang Ming Marine |
| AOPEN Inc |
Yang Ming and AOPEN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and AOPEN
The main advantage of trading using opposite Yang Ming and AOPEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, AOPEN 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 AOPEN will offset losses from the drop in AOPEN'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 |
| AOPEN vs. Elite Semiconductor Memory | AOPEN vs. Tripod Technology Corp | AOPEN vs. Chenming Mold Industrial | AOPEN vs. Asia Optical 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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