Correlation Between Tze Shin and Yang Ming
Can any of the company-specific risk be diversified away by investing in both Tze Shin and Yang Ming 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 Tze Shin and Yang Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tze Shin International and Yang Ming Marine, you can compare the effects of market volatilities on Tze Shin and Yang Ming 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 Tze Shin with a short position of Yang Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tze Shin and Yang Ming.
Diversification Opportunities for Tze Shin and Yang Ming
Very good diversification
The 3 months correlation between Tze and Yang is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Tze Shin International and Yang Ming Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yang Ming Marine and Tze Shin 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 Tze Shin International are associated (or correlated) with Yang Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yang Ming Marine has no effect on the direction of Tze Shin i.e., Tze Shin and Yang Ming go up and down completely randomly.
Pair Corralation between Tze Shin and Yang Ming
Assuming the 90 days trading horizon Tze Shin International is expected to under-perform the Yang Ming. But the stock apears to be less risky and, when comparing its historical volatility, Tze Shin International is 2.29 times less risky than Yang Ming. The stock trades about -0.08 of its potential returns per unit of risk. The Yang Ming Marine is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,180 in Yang Ming Marine on September 12, 2024 and sell it today you would earn a total of 870.00 from holding Yang Ming Marine or generate 12.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tze Shin International vs. Yang Ming Marine
Performance |
| Timeline |
| Tze Shin International |
| Yang Ming Marine |
Tze Shin and Yang Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tze Shin and Yang Ming
The main advantage of trading using opposite Tze Shin and Yang Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tze Shin position performs unexpectedly, Yang Ming 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 Yang Ming will offset losses from the drop in Yang Ming's long position.| Tze Shin vs. Yang Ming Marine | Tze Shin vs. Wan Hai Lines | Tze Shin vs. U Ming Marine Transport | Tze Shin vs. Taiwan Navigation Co |
| Yang Ming vs. Evergreen Marine Corp | Yang Ming vs. Wan Hai Lines | Yang Ming vs. China Airlines | Yang Ming vs. Eva Airways Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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