Correlation Between Yang Ming and FocalTech Systems
Can any of the company-specific risk be diversified away by investing in both Yang Ming and FocalTech Systems 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 FocalTech Systems 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 FocalTech Systems Co, you can compare the effects of market volatilities on Yang Ming and FocalTech Systems 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 FocalTech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and FocalTech Systems.
Diversification Opportunities for Yang Ming and FocalTech Systems
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yang and FocalTech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and FocalTech Systems Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FocalTech Systems 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 FocalTech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FocalTech Systems has no effect on the direction of Yang Ming i.e., Yang Ming and FocalTech Systems go up and down completely randomly.
Pair Corralation between Yang Ming and FocalTech Systems
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.06 times more return on investment than FocalTech Systems. However, Yang Ming is 1.06 times more volatile than FocalTech Systems Co. It trades about 0.05 of its potential returns per unit of risk. FocalTech Systems Co is currently generating about 0.05 per unit of risk. If you would invest 4,838 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 3,212 from holding Yang Ming Marine or generate 66.39% 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. FocalTech Systems Co
Performance |
| Timeline |
| Yang Ming Marine |
| FocalTech Systems |
Yang Ming and FocalTech Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and FocalTech Systems
The main advantage of trading using opposite Yang Ming and FocalTech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, FocalTech Systems 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 FocalTech Systems will offset losses from the drop in FocalTech Systems' 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 |
| FocalTech Systems vs. Novatek Microelectronics Corp | FocalTech Systems vs. Sitronix Technology Corp | FocalTech Systems vs. Elan Microelectronics Corp | FocalTech Systems vs. Global Unichip 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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