Correlation Between U Ming and Anderson Industrial

Can any of the company-specific risk be diversified away by investing in both U Ming and Anderson Industrial 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 Anderson Industrial 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 Anderson Industrial Corp, you can compare the effects of market volatilities on U Ming and Anderson Industrial 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 Anderson Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and Anderson Industrial.

Diversification Opportunities for U Ming and Anderson Industrial

0.38

Correlation Coefficient

U Ming  Anderson Industrial

Weak diversification

The 3 months correlation between 2606 and Anderson is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Anderson Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anderson Industrial Corp 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 Anderson Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anderson Industrial Corp has no effect on the direction of U Ming i.e., U Ming and Anderson Industrial go up and down completely randomly.

Pair Corralation between U Ming and Anderson Industrial

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.47 times more return on investment than Anderson Industrial. However, U Ming Marine Transport is 2.12 times less risky than Anderson Industrial. It trades about -0.22 of its potential returns per unit of risk. Anderson Industrial Corp is currently generating about -0.31 per unit of risk. If you would invest  6,050  in U Ming Marine Transport on September 15, 2024 and sell it today you would lose (330.00) from holding U Ming Marine Transport or give up 5.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

U Ming Marine Transport  vs.  Anderson Industrial Corp

U Ming Marine

Risk-Adjusted Performance

10 of 100

OK

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Anderson Industrial Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Anderson Industrial Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Anderson Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with U Ming and Anderson Industrial

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

The idea behind U Ming Marine Transport and Anderson Industrial Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .