Correlation Between Yang Ming and Azion
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Azion 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 Azion 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 Azion, you can compare the effects of market volatilities on Yang Ming and Azion 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 Azion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Azion.
Diversification Opportunities for Yang Ming and Azion
Very good diversification
The 3 months correlation between Yang and Azion is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Azion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azion 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 Azion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azion has no effect on the direction of Yang Ming i.e., Yang Ming and Azion go up and down completely randomly.
Pair Corralation between Yang Ming and Azion
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.82 times more return on investment than Azion. However, Yang Ming Marine is 1.22 times less risky than Azion. It trades about 0.05 of its potential returns per unit of risk. Azion is currently generating about 0.04 per unit of risk. If you would invest 6,000 in Yang Ming Marine on November 3, 2024 and sell it today you would earn a total of 780.00 from holding Yang Ming Marine or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Azion
Performance |
| Timeline |
| Yang Ming Marine |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Azion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Yang Ming and Azion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Azion
The main advantage of trading using opposite Yang Ming and Azion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Azion 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 Azion will offset losses from the drop in Azion's long position.The idea behind Yang Ming Marine and Azion pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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