Correlation Between U Ming and King Slide

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

Diversification Opportunities for U Ming and King Slide

0.95

Correlation Coefficient

U Ming  King Slide

Almost no diversification

The 3 months correlation between 2606 and King is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and King Slide Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Slide Works 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 King Slide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Slide Works has no effect on the direction of U Ming i.e., U Ming and King Slide go up and down completely randomly.

Pair Corralation between U Ming and King Slide

Assuming the 90 days trading horizon U Ming is expected to generate 1.27 times less return on investment than King Slide. In addition to that, U Ming is 1.01 times more volatile than King Slide Works. It trades about 0.11 of its total potential returns per unit of risk. King Slide Works is currently generating about 0.14 per unit of volatility. If you would invest  154,500  in King Slide Works on December 28, 2024 and sell it today you would earn a total of  35,500  from holding King Slide Works or generate 22.98% return on investment over 90 days.

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

U Ming Marine Transport  vs.  King Slide Works

U Ming Marine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 8 (%) 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.

King Slide Works

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in King Slide Works are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, King Slide showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Ming and King Slide

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

The idea behind U Ming Marine Transport and King Slide Works 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.