Correlation Between Yang Ming and Wafer Works
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Wafer Works 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 Wafer Works 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 Wafer Works, you can compare the effects of market volatilities on Yang Ming and Wafer Works 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 Wafer Works. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Wafer Works.
Diversification Opportunities for Yang Ming and Wafer Works
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Wafer is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Wafer Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wafer Works 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 Wafer Works. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wafer Works has no effect on the direction of Yang Ming i.e., Yang Ming and Wafer Works go up and down completely randomly.
Pair Corralation between Yang Ming and Wafer Works
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.84 times more return on investment than Wafer Works. However, Yang Ming is 1.84 times more volatile than Wafer Works. It trades about 0.19 of its potential returns per unit of risk. Wafer Works is currently generating about -0.31 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 Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yang Ming Marine vs. Wafer Works
Performance |
| Timeline |
| Yang Ming Marine |
| Wafer Works |
Yang Ming and Wafer Works Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Wafer Works
The main advantage of trading using opposite Yang Ming and Wafer Works positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Wafer Works 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 Wafer Works will offset losses from the drop in Wafer Works' 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 |
| Wafer Works vs. Sino American Silicon Products | Wafer Works vs. GlobalWafers Co | Wafer Works vs. Motech Industries Co | Wafer Works vs. Formosa Sumco Technology |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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