Correlation Between Yang Ming and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Chien Kuo 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 Chien Kuo 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 Chien Kuo Construction, you can compare the effects of market volatilities on Yang Ming and Chien Kuo 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 Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Chien Kuo.
Diversification Opportunities for Yang Ming and Chien Kuo
Poor diversification
The 3 months correlation between Yang and Chien is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction 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 Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of Yang Ming i.e., Yang Ming and Chien Kuo go up and down completely randomly.
Pair Corralation between Yang Ming and Chien Kuo
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.28 times more return on investment than Chien Kuo. However, Yang Ming is 1.28 times more volatile than Chien Kuo Construction. It trades about 0.19 of its potential returns per unit of risk. Chien Kuo Construction is currently generating about 0.17 per unit of risk. If you would invest 7,180 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 870.00 from holding Yang Ming Marine or generate 12.12% 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. Chien Kuo Construction
Performance |
Timeline |
Yang Ming Marine |
Chien Kuo Construction |
Yang Ming and Chien Kuo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Yang Ming and Chien Kuo
The main advantage of trading using opposite Yang Ming and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo'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 |
Chien Kuo vs. Yang Ming Marine | Chien Kuo vs. Wan Hai Lines | Chien Kuo vs. U Ming Marine Transport | Chien Kuo 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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