Correlation Between Run Long and Yang Ming

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

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

Diversification Opportunities for Run Long and Yang Ming

-0.85

Correlation Coefficient

Run Long  Yang Ming

Pay attention - limited upside

The 3 months correlation between Run and Yang is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Run Long Construction 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 Run Long 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 Run Long Construction 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 Run Long i.e., Run Long and Yang Ming go up and down completely randomly.

Pair Corralation between Run Long and Yang Ming

Assuming the 90 days trading horizon Run Long Construction is expected to under-perform the Yang Ming. But the stock apears to be less risky and, when comparing its historical volatility, Run Long Construction is 1.66 times less risky than Yang Ming. The stock trades about -0.3 of its potential returns per unit of risk. The Yang Ming Marine is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6,330  in Yang Ming Marine on October 13, 2024 and sell it today you would earn a total of  890.00  from holding Yang Ming Marine or generate 14.06% return on investment over 90 days.

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

Run Long Construction  vs.  Yang Ming Marine

Run Long Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Run Long Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Yang Ming Marine

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yang Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Run Long and Yang Ming

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

The idea behind Run Long Construction and Yang Ming Marine 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.