Correlation Between Awea Mechantronic and U Ming

Can any of the company-specific risk be diversified away by investing in both Awea Mechantronic 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 Awea Mechantronic and U Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Awea Mechantronic Co and U Ming Marine Transport, you can compare the effects of market volatilities on Awea Mechantronic 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 Awea Mechantronic with a short position of U Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awea Mechantronic and U Ming.

Diversification Opportunities for Awea Mechantronic and U Ming

0.86

Correlation Coefficient

Awea Mechantronic  U Ming

Very poor diversification

The 3 months correlation between Awea and 2606 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Awea Mechantronic 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 Awea Mechantronic 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 Awea Mechantronic 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 Awea Mechantronic i.e., Awea Mechantronic and U Ming go up and down completely randomly.

Pair Corralation between Awea Mechantronic and U Ming

Assuming the 90 days trading horizon Awea Mechantronic is expected to generate 3.39 times less return on investment than U Ming. But when comparing it to its historical volatility, Awea Mechantronic Co is 2.81 times less risky than U Ming. It trades about 0.12 of its potential returns per unit of risk. U Ming Marine Transport is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,830  in U Ming Marine Transport on December 4, 2024 and sell it today you would earn a total of  1,310  from holding U Ming Marine Transport or generate 22.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Awea Mechantronic Co  vs.  U Ming Marine Transport

Awea Mechantronic

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Awea Mechantronic Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Awea Mechantronic may actually be approaching a critical reversion point that can send shares even higher in April 2025.

U Ming Marine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Awea Mechantronic and U Ming

The main advantage of trading using opposite Awea Mechantronic and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awea Mechantronic 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.

The idea behind Awea Mechantronic Co and U Ming Marine Transport pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.