Correlation Between Yang Ming and Harmony Electronics
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Harmony Electronics 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 Harmony Electronics 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 Harmony Electronics, you can compare the effects of market volatilities on Yang Ming and Harmony Electronics 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 Harmony Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Harmony Electronics.
Diversification Opportunities for Yang Ming and Harmony Electronics
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Harmony is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Harmony Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Electronics 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 Harmony Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Electronics has no effect on the direction of Yang Ming i.e., Yang Ming and Harmony Electronics go up and down completely randomly.
Pair Corralation between Yang Ming and Harmony Electronics
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.1 times more return on investment than Harmony Electronics. However, Yang Ming is 2.1 times more volatile than Harmony Electronics. It trades about 0.25 of its potential returns per unit of risk. Harmony Electronics is currently generating about -0.3 per unit of risk. If you would invest 6,810 in Yang Ming Marine on August 28, 2024 and sell it today you would earn a total of 840.00 from holding Yang Ming Marine or generate 12.33% 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. Harmony Electronics
Performance |
| Timeline |
| Yang Ming Marine |
| Harmony Electronics |
Yang Ming and Harmony Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Harmony Electronics
The main advantage of trading using opposite Yang Ming and Harmony Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Harmony Electronics 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 Harmony Electronics will offset losses from the drop in Harmony Electronics' 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 |
| Harmony Electronics vs. Integrated Service Technology | Harmony Electronics vs. ASE Industrial Holding | Harmony Electronics vs. eMemory Technology | Harmony Electronics vs. King Yuan Electronics |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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