Correlation Between Yang Ming and Edom Technology
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Edom Technology 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 Edom Technology 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 Edom Technology Co, you can compare the effects of market volatilities on Yang Ming and Edom Technology 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 Edom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Edom Technology.
Diversification Opportunities for Yang Ming and Edom Technology
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Yang and Edom is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Edom Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edom Technology 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 Edom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edom Technology has no effect on the direction of Yang Ming i.e., Yang Ming and Edom Technology go up and down completely randomly.
Pair Corralation between Yang Ming and Edom Technology
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.98 times more return on investment than Edom Technology. However, Yang Ming Marine is 1.02 times less risky than Edom Technology. It trades about 0.08 of its potential returns per unit of risk. Edom Technology Co is currently generating about 0.04 per unit of risk. If you would invest 4,310 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 3,740 from holding Yang Ming Marine or generate 86.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Edom Technology Co
Performance |
| Timeline |
| Yang Ming Marine |
| Edom Technology |
Yang Ming and Edom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Edom Technology
The main advantage of trading using opposite Yang Ming and Edom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Edom Technology 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 Edom Technology will offset losses from the drop in Edom Technology'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 |
| Edom Technology vs. Altek Corp | Edom Technology vs. ALi Corp | Edom Technology vs. Leader Electronics | Edom Technology vs. Spirox Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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