Correlation Between Yang Ming and Radiant Opto
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Radiant Opto 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 Radiant Opto 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 Radiant Opto Electronics Corp, you can compare the effects of market volatilities on Yang Ming and Radiant Opto 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 Radiant Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Radiant Opto.
Diversification Opportunities for Yang Ming and Radiant Opto
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Yang and Radiant is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Radiant Opto Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Opto Electro 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 Radiant Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Opto Electro has no effect on the direction of Yang Ming i.e., Yang Ming and Radiant Opto go up and down completely randomly.
Pair Corralation between Yang Ming and Radiant Opto
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.36 times more return on investment than Radiant Opto. However, Yang Ming is 1.36 times more volatile than Radiant Opto Electronics Corp. It trades about 0.16 of its potential returns per unit of risk. Radiant Opto Electronics Corp is currently generating about -0.2 per unit of risk. If you would invest 6,810 in Yang Ming Marine on September 3, 2024 and sell it today you would earn a total of 510.00 from holding Yang Ming Marine or generate 7.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Radiant Opto Electronics Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Radiant Opto Electro |
Yang Ming and Radiant Opto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Radiant Opto
The main advantage of trading using opposite Yang Ming and Radiant Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Radiant Opto 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 Radiant Opto will offset losses from the drop in Radiant Opto'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 |
| Radiant Opto vs. Taiwan Semiconductor Manufacturing | Radiant Opto vs. Yang Ming Marine | Radiant Opto vs. ASE Industrial Holding | Radiant Opto 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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