Correlation Between U Ming and Hiwin Technologies

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

Diversification Opportunities for U Ming and Hiwin Technologies

0.54

Correlation Coefficient

U Ming  Hiwin Technologies

Very weak diversification

The 3 months correlation between 2606 and Hiwin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Hiwin Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiwin Technologies 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 Hiwin Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiwin Technologies Corp has no effect on the direction of U Ming i.e., U Ming and Hiwin Technologies go up and down completely randomly.

Pair Corralation between U Ming and Hiwin Technologies

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.85 times more return on investment than Hiwin Technologies. However, U Ming Marine Transport is 1.18 times less risky than Hiwin Technologies. It trades about 0.17 of its potential returns per unit of risk. Hiwin Technologies Corp is currently generating about 0.12 per unit of risk. If you would invest  5,790  in U Ming Marine Transport on December 5, 2024 and sell it today you would earn a total of  1,730  from holding U Ming Marine Transport or generate 29.88% return on investment over 90 days.

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

U Ming Marine Transport  vs.  Hiwin Technologies Corp

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 13 (%) 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.

Hiwin Technologies Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hiwin Technologies Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Hiwin Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Ming and Hiwin Technologies

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

The idea behind U Ming Marine Transport and Hiwin Technologies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.