Correlation Between Yang Ming and Sunny Friend
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Sunny Friend 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 Sunny Friend 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 Sunny Friend Environmental, you can compare the effects of market volatilities on Yang Ming and Sunny Friend 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 Sunny Friend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Sunny Friend.
Diversification Opportunities for Yang Ming and Sunny Friend
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Yang and Sunny is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Sunny Friend Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Friend Environ 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 Sunny Friend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Friend Environ has no effect on the direction of Yang Ming i.e., Yang Ming and Sunny Friend go up and down completely randomly.
Pair Corralation between Yang Ming and Sunny Friend
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.2 times more return on investment than Sunny Friend. However, Yang Ming is 1.2 times more volatile than Sunny Friend Environmental. It trades about 0.06 of its potential returns per unit of risk. Sunny Friend Environmental is currently generating about 0.0 per unit of risk. If you would invest 7,290 in Yang Ming Marine on August 28, 2024 and sell it today you would earn a total of 360.00 from holding Yang Ming Marine or generate 4.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yang Ming Marine vs. Sunny Friend Environmental
Performance |
| Timeline |
| Yang Ming Marine |
| Sunny Friend Environ |
Yang Ming and Sunny Friend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Sunny Friend
The main advantage of trading using opposite Yang Ming and Sunny Friend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Sunny Friend 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 Sunny Friend will offset losses from the drop in Sunny Friend'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 |
| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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