Correlation Between Yang Ming and Holiday Entertainment
Can any of the company-specific risk be diversified away by investing in both Yang Ming and Holiday Entertainment 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 Holiday Entertainment 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 Holiday Entertainment Co, you can compare the effects of market volatilities on Yang Ming and Holiday Entertainment 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 Holiday Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Holiday Entertainment.
Diversification Opportunities for Yang Ming and Holiday Entertainment
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yang and Holiday is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Holiday Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Entertainment 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 Holiday Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Entertainment has no effect on the direction of Yang Ming i.e., Yang Ming and Holiday Entertainment go up and down completely randomly.
Pair Corralation between Yang Ming and Holiday Entertainment
Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 4.46 times more return on investment than Holiday Entertainment. However, Yang Ming is 4.46 times more volatile than Holiday Entertainment Co. It trades about 0.18 of its potential returns per unit of risk. Holiday Entertainment Co is currently generating about -0.22 per unit of risk. If you would invest 6,640 in Yang Ming Marine on August 31, 2024 and sell it today you would earn a total of 680.00 from holding Yang Ming Marine or generate 10.24% 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. Holiday Entertainment Co
Performance |
| Timeline |
| Yang Ming Marine |
| Holiday Entertainment |
Yang Ming and Holiday Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yang Ming and Holiday Entertainment
The main advantage of trading using opposite Yang Ming and Holiday Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yang Ming position performs unexpectedly, Holiday Entertainment 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 Holiday Entertainment will offset losses from the drop in Holiday Entertainment's long position.| Yang Ming vs. Wan Hai Lines | Yang Ming vs. China Airlines | Yang Ming vs. Eva Airways Corp | Yang Ming vs. China Steel Corp |
| Holiday Entertainment vs. Yulon Finance Corp | Holiday Entertainment vs. Taiwan Secom Co | Holiday Entertainment vs. Taiwan Shin Kong | Holiday Entertainment vs. Formosa International Hotels |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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