Correlation Between Yang Ming and Chia Chang
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Chia Chang 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 Chia Chang 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 Chia Chang Co, you can compare the effects of market volatilities on Yang Ming and Chia Chang 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 Chia Chang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Chia Chang.
Diversification Opportunities for Yang Ming and Chia Chang
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yang and Chia is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Chia Chang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chia Chang 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 Chia Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chia Chang has no effect on the direction of Yang Ming i.e., Yang Ming and Chia Chang go up and down completely randomly.
Pair Corralation between Yang Ming and Chia Chang
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.51 times more return on investment than Chia Chang. However, Yang Ming is 2.51 times more volatile than Chia Chang Co. It trades about 0.05 of its potential returns per unit of risk. Chia Chang 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 Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Yang Ming Marine vs. Chia Chang Co
Performance |
| Timeline |
| Yang Ming Marine |
| Chia Chang |
Yang Ming and Chia Chang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Chia Chang
The main advantage of trading using opposite Yang Ming and Chia Chang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Chia Chang 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 Chia Chang will offset losses from the drop in Chia Chang'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 |
| Chia Chang vs. Yang Ming Marine | Chia Chang vs. Wan Hai Lines | Chia Chang vs. U Ming Marine Transport | Chia Chang vs. Taiwan Navigation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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