Correlation Between Yem Chio and Ocean Plastics
Can any of the company-specific risk be diversified away by investing in both Yem Chio and Ocean Plastics 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 Yem Chio and Ocean Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yem Chio Co and Ocean Plastics Co, you can compare the effects of market volatilities on Yem Chio and Ocean Plastics 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 Yem Chio with a short position of Ocean Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yem Chio and Ocean Plastics.
Diversification Opportunities for Yem Chio and Ocean Plastics
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Yem and Ocean is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Yem Chio Co and Ocean Plastics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Plastics and Yem Chio 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 Yem Chio Co are associated (or correlated) with Ocean Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Plastics has no effect on the direction of Yem Chio i.e., Yem Chio and Ocean Plastics go up and down completely randomly.
Pair Corralation between Yem Chio and Ocean Plastics
Assuming the 90 days trading horizon Yem Chio Co is expected to generate 1.0 times more return on investment than Ocean Plastics. However, Yem Chio is 1.0 times more volatile than Ocean Plastics Co. It trades about -0.08 of its potential returns per unit of risk. Ocean Plastics Co is currently generating about -0.14 per unit of risk. If you would invest 1,835 in Yem Chio Co on September 1, 2024 and sell it today you would lose (35.00) from holding Yem Chio Co or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yem Chio Co vs. Ocean Plastics Co
Performance |
| Timeline |
| Yem Chio |
| Ocean Plastics |
Yem Chio and Ocean Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yem Chio and Ocean Plastics
The main advantage of trading using opposite Yem Chio and Ocean Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yem Chio position performs unexpectedly, Ocean Plastics 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 Ocean Plastics will offset losses from the drop in Ocean Plastics' long position.| Yem Chio vs. BES Engineering Co | Yem Chio vs. Continental Holdings Corp | Yem Chio vs. Kee Tai Properties | Yem Chio vs. Hung Sheng Construction |
| Ocean Plastics vs. Basso Industry Corp | Ocean Plastics vs. Chung Hsin Electric Machinery | Ocean Plastics vs. TYC Brother Industrial | Ocean Plastics vs. TECO Electric Machinery |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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