Correlation Between Yang Ming and Hotai Finance
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Hotai Finance 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 Hotai Finance 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 Hotai Finance Corp, you can compare the effects of market volatilities on Yang Ming and Hotai Finance 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 Hotai Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Hotai Finance.
Diversification Opportunities for Yang Ming and Hotai Finance
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Yang and Hotai is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Hotai Finance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotai Finance Corp 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 Hotai Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotai Finance Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Hotai Finance go up and down completely randomly.
Pair Corralation between Yang Ming and Hotai Finance
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.95 times more return on investment than Hotai Finance. However, Yang Ming is 1.95 times more volatile than Hotai Finance Corp. It trades about 0.32 of its potential returns per unit of risk. Hotai Finance Corp is currently generating about -0.38 per unit of risk. If you would invest 6,850 in Yang Ming Marine on August 24, 2024 and sell it today you would earn a total of 1,080 from holding Yang Ming Marine or generate 15.77% 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. Hotai Finance Corp
Performance |
| Timeline |
| Yang Ming Marine |
| Hotai Finance Corp |
Yang Ming and Hotai Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Hotai Finance
The main advantage of trading using opposite Yang Ming and Hotai Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Hotai Finance 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 Hotai Finance will offset losses from the drop in Hotai Finance'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 |
| Hotai Finance vs. Chailease Holding Co | Hotai Finance vs. Yulon Finance Corp | Hotai Finance vs. Pou Chen Corp | Hotai Finance vs. Ruentex Industries |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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