Correlation Between Yang Ming and Wistron Corp
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Wistron 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 Wistron 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 Wistron Corp, you can compare the effects of market volatilities on Yang Ming and Wistron 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 Wistron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Wistron Corp.
Diversification Opportunities for Yang Ming and Wistron Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and Wistron is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Wistron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wistron 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 Wistron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wistron Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Wistron Corp go up and down completely randomly.
Pair Corralation between Yang Ming and Wistron Corp
Assuming the 90 days trading horizon Yang Ming is expected to generate 2.42 times less return on investment than Wistron Corp. In addition to that, Yang Ming is 1.05 times more volatile than Wistron Corp. It trades about 0.05 of its total potential returns per unit of risk. Wistron Corp is currently generating about 0.12 per unit of volatility. If you would invest 10,150 in Wistron Corp on September 3, 2024 and sell it today you would earn a total of 1,200 from holding Wistron Corp or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Wistron Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Wistron Corp |
Yang Ming and Wistron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Wistron Corp
The main advantage of trading using opposite Yang Ming and Wistron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Wistron 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 Wistron Corp will offset losses from the drop in Wistron Corp'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 |
| Wistron Corp vs. Taiwan Semiconductor Manufacturing | Wistron Corp vs. Yang Ming Marine | Wistron Corp vs. ASE Industrial Holding | Wistron Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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