Correlation Between Wan Hai and U Ming
Can any of the company-specific risk be diversified away by investing in both Wan Hai and U 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 Wan Hai and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wan Hai Lines and U Ming Marine Transport, you can compare the effects of market volatilities on Wan Hai and U 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 Wan Hai with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wan Hai and U Ming.
Diversification Opportunities for Wan Hai and U Ming
Modest diversification
The 3 months correlation between Wan and 2606 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wan Hai Lines and U Ming Marine Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Ming Marine and Wan Hai 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 Wan Hai Lines are associated (or correlated) with U Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Ming Marine has no effect on the direction of Wan Hai i.e., Wan Hai and U Ming go up and down completely randomly.
Pair Corralation between Wan Hai and U Ming
Assuming the 90 days trading horizon Wan Hai Lines is expected to under-perform the U Ming. But the stock apears to be less risky and, when comparing its historical volatility, Wan Hai Lines is 1.32 times less risky than U Ming. The stock trades about -0.25 of its potential returns per unit of risk. The U Ming Marine Transport is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,380 in U Ming Marine Transport on October 22, 2024 and sell it today you would earn a total of 540.00 from holding U Ming Marine Transport or generate 10.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Wan Hai Lines vs. U Ming Marine Transport
Performance |
| Timeline |
| Wan Hai Lines |
| U Ming Marine |
Wan Hai and U Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wan Hai and U Ming
The main advantage of trading using opposite Wan Hai and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wan Hai position performs unexpectedly, U 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 U Ming will offset losses from the drop in U Ming's long position.| Wan Hai vs. Yang Ming Marine | Wan Hai vs. Evergreen Marine Corp | Wan Hai vs. Eva Airways Corp | Wan Hai vs. China Airlines |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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