Correlation Between Baotek Industrial and U Ming
Can any of the company-specific risk be diversified away by investing in both Baotek Industrial 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 Baotek Industrial and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baotek Industrial Materials and U Ming Marine Transport, you can compare the effects of market volatilities on Baotek Industrial 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 Baotek Industrial with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baotek Industrial and U Ming.
Diversification Opportunities for Baotek Industrial and U Ming
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Baotek and 2606 is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Baotek Industrial Materials 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 Baotek Industrial 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 Baotek Industrial Materials 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 Baotek Industrial i.e., Baotek Industrial and U Ming go up and down completely randomly.
Pair Corralation between Baotek Industrial and U Ming
Assuming the 90 days trading horizon Baotek Industrial Materials is expected to under-perform the U Ming. In addition to that, Baotek Industrial is 1.48 times more volatile than U Ming Marine Transport. It trades about -0.01 of its total potential returns per unit of risk. U Ming Marine Transport is currently generating about 0.03 per unit of volatility. If you would invest 4,905 in U Ming Marine Transport on September 2, 2024 and sell it today you would earn a total of 1,055 from holding U Ming Marine Transport or generate 21.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baotek Industrial Materials vs. U Ming Marine Transport
Performance |
| Timeline |
| Baotek Industrial |
| U Ming Marine |
Baotek Industrial and U Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baotek Industrial and U Ming
The main advantage of trading using opposite Baotek Industrial and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baotek Industrial 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.| Baotek Industrial vs. Far Eastern New | Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Formosa Taffeta Co |
| U Ming vs. BES Engineering Co | U Ming vs. Continental Holdings Corp | U Ming vs. Kee Tai Properties | U Ming vs. Hung Sheng Construction |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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