Correlation Between Yang Ming and Sports Gear
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Sports Gear 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 Sports Gear 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 Sports Gear Co, you can compare the effects of market volatilities on Yang Ming and Sports Gear 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 Sports Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Sports Gear.
Diversification Opportunities for Yang Ming and Sports Gear
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yang and Sports is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear 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 Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of Yang Ming i.e., Yang Ming and Sports Gear go up and down completely randomly.
Pair Corralation between Yang Ming and Sports Gear
Assuming the 90 days trading horizon Yang Ming is expected to generate 1.79 times less return on investment than Sports Gear. In addition to that, Yang Ming is 1.14 times more volatile than Sports Gear Co. It trades about 0.08 of its total potential returns per unit of risk. Sports Gear Co is currently generating about 0.16 per unit of volatility. If you would invest 6,429 in Sports Gear Co on August 25, 2024 and sell it today you would earn a total of 8,321 from holding Sports Gear Co or generate 129.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Sports Gear Co
Performance |
| Timeline |
| Yang Ming Marine |
| Sports Gear |
Yang Ming and Sports Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Sports Gear
The main advantage of trading using opposite Yang Ming and Sports Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Sports Gear 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 Sports Gear will offset losses from the drop in Sports Gear's long position.| Yang Ming vs. Sunny Friend Environmental | Yang Ming vs. TTET Union Corp | Yang Ming vs. ECOVE Environment Corp | Yang Ming vs. Yulon Finance Corp |
| Sports Gear vs. Giant Manufacturing Co | Sports Gear vs. Johnson Health Tech | Sports Gear vs. Power Wind Health |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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