Correlation Between Yang Ming and Deltamac Taiwan
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Deltamac Taiwan 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 Deltamac Taiwan 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 Deltamac Taiwan Co, you can compare the effects of market volatilities on Yang Ming and Deltamac Taiwan 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 Deltamac Taiwan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Deltamac Taiwan.
Diversification Opportunities for Yang Ming and Deltamac Taiwan
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Deltamac is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Deltamac Taiwan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deltamac Taiwan 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 Deltamac Taiwan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deltamac Taiwan has no effect on the direction of Yang Ming i.e., Yang Ming and Deltamac Taiwan go up and down completely randomly.
Pair Corralation between Yang Ming and Deltamac Taiwan
Assuming the 90 days trading horizon Yang Ming Marine is expected to under-perform the Deltamac Taiwan. But the stock apears to be less risky and, when comparing its historical volatility, Yang Ming Marine is 3.06 times less risky than Deltamac Taiwan. The stock trades about -0.36 of its potential returns per unit of risk. The Deltamac Taiwan Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,325 in Deltamac Taiwan Co on October 24, 2024 and sell it today you would lose (185.00) from holding Deltamac Taiwan Co or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Yang Ming Marine vs. Deltamac Taiwan Co
Performance |
| Timeline |
| Yang Ming Marine |
| Deltamac Taiwan |
Yang Ming and Deltamac Taiwan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Deltamac Taiwan
The main advantage of trading using opposite Yang Ming and Deltamac Taiwan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Deltamac Taiwan 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 Deltamac Taiwan will offset losses from the drop in Deltamac Taiwan'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 |
| Deltamac Taiwan vs. Chung Hwa Food | Deltamac Taiwan vs. Sunspring Metal Corp | Deltamac Taiwan vs. Camellia Metal Co | Deltamac Taiwan vs. Gamania Digital Entertainment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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