Correlation Between Yang Ming and ASE Industrial
Can any of the company-specific risk be diversified away by investing in both Yang Ming and ASE Industrial 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 ASE Industrial 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 ASE Industrial Holding, you can compare the effects of market volatilities on Yang Ming and ASE Industrial 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 ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and ASE Industrial.
Diversification Opportunities for Yang Ming and ASE Industrial
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yang and ASE is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Yang Ming i.e., Yang Ming and ASE Industrial go up and down completely randomly.
Pair Corralation between Yang Ming and ASE Industrial
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.19 times more return on investment than ASE Industrial. However, Yang Ming is 1.19 times more volatile than ASE Industrial Holding. It trades about 0.06 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.04 per unit of risk. If you would invest 4,482 in Yang Ming Marine on September 4, 2024 and sell it today you would earn a total of 2,948 from holding Yang Ming Marine or generate 65.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. ASE Industrial Holding
Performance |
| Timeline |
| Yang Ming Marine |
| ASE Industrial Holding |
Yang Ming and ASE Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and ASE Industrial
The main advantage of trading using opposite Yang Ming and ASE Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, ASE Industrial 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 ASE Industrial will offset losses from the drop in ASE Industrial'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 |
| ASE Industrial vs. Taiwan Semiconductor Manufacturing | ASE Industrial vs. Yang Ming Marine | ASE Industrial vs. AU Optronics | ASE Industrial vs. Innolux 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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