Correlation Between Sunny Friend and Yang Ming
Can any of the company-specific risk be diversified away by investing in both Sunny Friend 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 Sunny Friend and Yang Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Friend Environmental and Yang Ming Marine, you can compare the effects of market volatilities on Sunny Friend 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 Sunny Friend with a short position of Yang Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Friend and Yang Ming.
Diversification Opportunities for Sunny Friend and Yang Ming
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sunny and Yang is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Friend Environmental 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 Sunny Friend 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 Sunny Friend Environmental 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 Sunny Friend i.e., Sunny Friend and Yang Ming go up and down completely randomly.
Pair Corralation between Sunny Friend and Yang Ming
Assuming the 90 days trading horizon Sunny Friend Environmental is expected to under-perform the Yang Ming. But the stock apears to be less risky and, when comparing its historical volatility, Sunny Friend Environmental is 1.25 times less risky than Yang Ming. The stock trades about -0.18 of its potential returns per unit of risk. The Yang Ming Marine is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6,810 in Yang Ming Marine on August 28, 2024 and sell it today you would earn a total of 840.00 from holding Yang Ming Marine or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Friend Environmental vs. Yang Ming Marine
Performance |
| Timeline |
| Sunny Friend Environ |
| Yang Ming Marine |
Sunny Friend and Yang Ming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Friend and Yang Ming
The main advantage of trading using opposite Sunny Friend and Yang Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Friend 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.| Sunny Friend vs. Cleanaway Co | Sunny Friend vs. Taiwan Secom Co | Sunny Friend vs. TTET Union Corp | Sunny Friend vs. Tehmag Foods |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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