Correlation Between U Ming and SanDi Properties

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

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

Diversification Opportunities for U Ming and SanDi Properties

-0.06

Correlation Coefficient

U Ming  SanDi Properties

Good diversification

The 3 months correlation between 2606 and SanDi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and SanDi Properties Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SanDi Properties and U Ming 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 U Ming Marine Transport are associated (or correlated) with SanDi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SanDi Properties has no effect on the direction of U Ming i.e., U Ming and SanDi Properties go up and down completely randomly.

Pair Corralation between U Ming and SanDi Properties

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.4 times more return on investment than SanDi Properties. However, U Ming is 1.4 times more volatile than SanDi Properties Co. It trades about 0.14 of its potential returns per unit of risk. SanDi Properties Co is currently generating about -0.08 per unit of risk. If you would invest  5,710  in U Ming Marine Transport on December 27, 2024 and sell it today you would earn a total of  1,320  from holding U Ming Marine Transport or generate 23.12% return on investment over 90 days.

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

U Ming Marine Transport  vs.  SanDi Properties Co

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 10 (%) 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.

SanDi Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days SanDi Properties Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with U Ming and SanDi Properties

The main advantage of trading using opposite U Ming and SanDi Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, SanDi Properties 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 SanDi Properties will offset losses from the drop in SanDi Properties' long position.

The idea behind U Ming Marine Transport and SanDi Properties Co 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.