Correlation Between Yang Ming and Choice Development
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Choice Development 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 Choice Development 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 Choice Development, you can compare the effects of market volatilities on Yang Ming and Choice Development 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 Choice Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Choice Development.
Diversification Opportunities for Yang Ming and Choice Development
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Choice is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Choice Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Development 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 Choice Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Development has no effect on the direction of Yang Ming i.e., Yang Ming and Choice Development go up and down completely randomly.
Pair Corralation between Yang Ming and Choice Development
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.27 times more return on investment than Choice Development. However, Yang Ming is 1.27 times more volatile than Choice Development. It trades about 0.08 of its potential returns per unit of risk. Choice Development is currently generating about 0.05 per unit of risk. If you would invest 4,310 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 3,740 from holding Yang Ming Marine or generate 86.77% 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. Choice Development
Performance |
| Timeline |
| Yang Ming Marine |
| Choice Development |
Yang Ming and Choice Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Choice Development
The main advantage of trading using opposite Yang Ming and Choice Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Choice Development 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 Choice Development will offset losses from the drop in Choice Development'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 |
| Choice Development vs. Yang Ming Marine | Choice Development vs. Wan Hai Lines | Choice Development vs. U Ming Marine Transport | Choice Development vs. Taiwan Navigation Co |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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