Correlation Between Yang Ming and Cheng Mei
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Cheng Mei 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 Cheng Mei 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 Cheng Mei Materials, you can compare the effects of market volatilities on Yang Ming and Cheng Mei 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 Cheng Mei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Cheng Mei.
Diversification Opportunities for Yang Ming and Cheng Mei
Very good diversification
The 3 months correlation between Yang and Cheng is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Cheng Mei Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheng Mei Materials 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 Cheng Mei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheng Mei Materials has no effect on the direction of Yang Ming i.e., Yang Ming and Cheng Mei go up and down completely randomly.
Pair Corralation between Yang Ming and Cheng Mei
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.1 times more return on investment than Cheng Mei. However, Yang Ming is 1.1 times more volatile than Cheng Mei Materials. It trades about -0.02 of its potential returns per unit of risk. Cheng Mei Materials is currently generating about -0.04 per unit of risk. If you would invest 8,040 in Yang Ming Marine on September 3, 2024 and sell it today you would lose (720.00) from holding Yang Ming Marine or give up 8.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Cheng Mei Materials
Performance |
| Timeline |
| Yang Ming Marine |
| Cheng Mei Materials |
Yang Ming and Cheng Mei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Cheng Mei
The main advantage of trading using opposite Yang Ming and Cheng Mei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Cheng Mei 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 Cheng Mei will offset losses from the drop in Cheng Mei'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 |
| Cheng Mei vs. Taiwan Semiconductor Manufacturing | Cheng Mei vs. Yang Ming Marine | Cheng Mei vs. ASE Industrial Holding | Cheng Mei 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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