Correlation Between STARLUX Airlines and U Ming
Can any of the company-specific risk be diversified away by investing in both STARLUX Airlines 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 STARLUX Airlines and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STARLUX Airlines Co and U Ming Marine Transport, you can compare the effects of market volatilities on STARLUX Airlines 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 STARLUX Airlines with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of STARLUX Airlines and U Ming.
Diversification Opportunities for STARLUX Airlines and U Ming
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STARLUX and 2606 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding STARLUX Airlines Co 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 STARLUX Airlines 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 STARLUX Airlines Co 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 STARLUX Airlines i.e., STARLUX Airlines and U Ming go up and down completely randomly.
Pair Corralation between STARLUX Airlines and U Ming
Assuming the 90 days trading horizon STARLUX Airlines Co is expected to under-perform the U Ming. But the stock apears to be less risky and, when comparing its historical volatility, STARLUX Airlines Co is 1.19 times less risky than U Ming. The stock trades about -0.02 of its potential returns per unit of risk. The U Ming Marine Transport is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,960 in U Ming Marine Transport on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding U Ming Marine Transport or generate 20.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.46% |
| Values | Daily Returns |
STARLUX Airlines Co vs. U Ming Marine Transport
Performance |
| Timeline |
| STARLUX Airlines |
| U Ming Marine |
STARLUX Airlines and U Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STARLUX Airlines and U Ming
The main advantage of trading using opposite STARLUX Airlines and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STARLUX Airlines 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.| STARLUX Airlines vs. Taiwan Semiconductor Manufacturing | STARLUX Airlines vs. Hon Hai Precision | STARLUX Airlines vs. MediaTek | STARLUX Airlines vs. Chunghwa Telecom Co |
| U Ming vs. Sincere Navigation Corp | U Ming vs. Wan Hai Lines | U Ming vs. Yang Ming Marine | U Ming vs. Formosa Chemicals Fibre |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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